Erroneous judgment on Jurisdiction / violation of public policy (inadmissible); violation of the parties’ right to be heard (unfounded)

The Issue
Termination of a football contract of employment by the player with just cause – Deciding in equity without the parties’ permission (instead of applying a particular set of rules) is not a ground for annulment of the arbitral award based on Art. 190 (2) (b) PILA

The Facts

On 17 November 2016, the CAS rejected the appeal filed by the Football Player Z (the Player) against a FIFA DRC Decision between the Player and the Football Club X (the Club). The CAS also partially upheld the appeal filed by the same Club X, ordering it to pay the Player  a total of USD 366’166 for unpaid salaries. However, it did not order compensation for breach of contract without just cause (under the provisions of Art. 17 (1) of the FIFA Regulations on the Status and Transfer of Players, RSTP).

In the subsequent appeal before the Swiss Federal Tribunal, the Appellant (the Club) attacked the Award on the ground that the Arbitral Tribunal ruled on the case in equity instead of applying a specific set of rules (in casu the Swiss Code of Obligations). The Appellant employed the same argument but alleging the various grounds for annulment of an arbitral award under Art. 190 (2) Swiss Private International Law Act (PILA).

Deciding in equity is not a ground for annulment of the award based on Art. 190 (2) b PILA

More specifically, the Club  alleged violation of Article 190 (2) (b) PILA (which relates to the erroneous jurisdiction of the arbitral tribunal) because the Panel ruled in equity and therefore ruled “extra potestatem”. The Federal Tribunal rejected this ground as inadmissible since deciding in equity (without the parties’ authorization) might constitute an irregularity which does not affect the jurisdiction of the arbitral tribunal in the sense of Art. 190 (2) b PILA (4A_40/2017 at 3).

It is worth adding that a similar question (ruling ex aequo et bono instead of applying a specific set of rules) was also dealt with in a previous SFT judgment in 2012 (SFT 4A_14/2012 of 2 May 2012, at 3.2.2, a commercial arbitration procedure). In this case, the SFT had acknowledged that ruling ex aequo et bono was an irregularity that falls outside the scope of jurisdiction (even if this question was unclear in the doctrine). It further held that this irregularity could somehow relate to the violation of public policy (Art. 190 (2) (e) PILA, see ATF 116 II 634 at 4a) if it meets the conditions for violation of public policy. In any event, there is no such violation if the Panel simply reinforces its legal reasoning and does not abandon the realm of the law to go into ex aequo et bono.

Criticisms related to the non-application or the incorrect application of a specific legal provision fall outside the scope of Art. 190 (2) d PILA

The Appellant equally attacked the CAS Award for violation of his right to be heard (Art. 190 (2) d PILA) because the Panel failed to expressly state in its award what law it applied and the reasons why it did not apply the law that corresponded to the applicable regulations of FIFA and CAS and the agreement between the parties (4A_40/2017 at 4.2).

The Federal Tribunal dismissed the aforementioned argument by holding that the Panel had indeed dedicated an entire section analyzing the question of applicable law in which it reserved itself the right to apply Swiss law subsidiarily, according to the pertinent FIFA and CAS Rules.

The CAS Panel had further concluded that the Player had terminated the contract of employment with just cause and on such basis the Club had to pay the unpaid salaries to the Player. However, and based on the specificity of sport (provided for in Art. 17 of the FIFA RSTP) the Panel found that the club only owed the outstanding salaries for having terminated the contract without just cause.

The Federal Tribunal concluded that the Panel did not violate the Appellant’s right to be heard through its analysis. It considered that, in reality, the Appellant was criticizing the fact that the Panel did not apply – or inappropriately applied – a specific legal provision. However, said criticisms fall outside the scope of review of the Federal Tribunal under Art. 190 (2) PILA (4A_40.2017 at 4.2).

The Takeaway

In essence, this was a very short judgment where the Panel swiftly dismissed the one and sole argument that the Appellant raised by invoking the violation of Art. 190 (2) PILA under different angles: erroneous jurisdiction, violation of his right to be heard and, finally, violation of public policy – however without further comments on the last ground, see 4A_40/2017 at 5). There are very few takeaways from this judgment. The parties invoking various grounds for appeal (even based on the same main argument, as it was the case here) must develop each ground separately and establish the reasons that the particular argument / situation violated the particular provision of Art. 190 (2) PILA (see also Art. 77 (3) of the Swiss LTF (Law of the Federal Tribunal); see 4A_40/2017 at 5).

A. v. IWF (doping), Parties’ right to be heard and Public Policy
Judgment 4A_80/2017 of 25 July 2017

The Issue

Request for an expert report should be unequivocally made before the arbitral tribunal / Violation of the parties’ right to be heard requires to establish how the judicial oversight deprived a party from introducing and proving its position.

The Appellant (Alexei Lovchev) is a Russian weightlifter at international level who participated in the 2015 World Championships of Weightlifting in Houston, USA, as a member of the Russian team and won the gold medal and set two world records.

In November 2015, the Appellant underwent a doping control that resulted in an Adverse Analytical Finding (AAF) and showed the presence of the prohibited substance Ipamorelin in the Appellant’s sample in an extremely low concentration of 0.1 ng / ml. The WADA-accredited Laboratory B (B. Laboratory) conducted the controls and both the A and the B samples were found to be positive.

Following a hearing that took place before the IWF Committee in Budapest, the Committee issued a decision disqualifying the Appellant from the 2015 World Championships and imposing a sanction of ineligibility of four years. The IWF Committee held that it was comfortably satisfied that the analytical reports confirmed the existence of the prohibited substance Ipamorelin in the Appellant’s sample.

The Appellant appealed this decision to the Court of Arbitration for Sport (CAS), which confirmed the IWF decision with an arbitral award rendered on December 1, 2016. The Arbitrators were The Hon. Michael J. Beloff QC (Chairman), Prof. Ulrich Haas & Prof. Luigi Fumagalli.

The Federal Tribunal judgment

The Appellant lodged a civil law appeal to the Swiss Federal Tribunal requesting to annul the CAS Award and to revert the case back to CAS for a new decision, invoking in particular a violation of his right to be heard and a violation of public policy.

a) Violation of the parties’ right to be heard / equality of the parties

In essence, the Appellant argued that the CAS Panel violated his right to be heard by wrongly appreciating the concentration of the prohibited substance in question (1 ng/ml instead of 0.1 ng/ml). The Swiss Federal Tribunal dismissed this argument as not being part of the violation of the parties’ right to be heard (or public policy). In accordance with the well-established jurisprudence of the Federal Tribunal, a manifestly false or conflicting finding alone is not sufficient to annul an international arbitration award.

Furthermore, the Appellant alleged a violation of his right to be heard based on the fact that the CAS wrongly refused to admit his request for an expert report on the Limits of Detection [LOD], on Measurement Uncertainty [MU], and another analysis of the B sample. However, as it could be found from the file of the CAS proceedings, the Appellant merely requested that the Respondent disclose the parameters and criteria for LOD and MU for Ipamorelin but had not asked for an expert report on LOD and MU.

The other point in the Appellant’s plea before the Federal Tribunal concerned his request to have the analysis of the B sample conducted by the WADA-accredited laboratory but using an alternative detection method. The Federal Tribunal equally rejected this argument as inadmissible criticism of appellatory nature in that the Appellant failed to make a plea under Article 190 (2) PILA for his considerations that diverged from the Panel’s assessment (4A_80/2017 at 6.2). The Federal Tribunal therefore limited itself in controlling that the CAS Panel followed the procedure provided for in the IWF Anti-Doping Rules (the Appellant had the burden to rebut the presumption – based on the standard of a balance of probabilities) – of the violation of the anti-doping rules, which he failed to do in the case at hand (4A_80/2017 at 6.3). In particular, the Appellant should have raised doubts as to the results of the B. Laboratory (which were found to have complied with the applicable standards). The Appellant further alleged a violation of the principle of equal treatment because the CAS did not reveal a third analysis carried out by the B. Laboratory, but failed to substantiate in a sufficient manner why this was linked to the violation of the principle of equal treatment.

b) Violation of public policy

Lastly, the Appellant tried to invoke a violation of the principle of good faith and the prohibition of abuse of rights based on the four-year ban on exercising his professional activity (which, he argued, constituted a breach of public policy). Again, this was swiftly dismissed by the Federal Tribunal because the Appellant failed to substantiate how the different assessment of evidence by the Panel infringed public policy.

The Takeaway

This Federal Tribunal judgment reiterated the limits in validly alleging a breach of a parties’ right to be heard: It is clearly insufficient to allege such violation due to a wrong interpretation made by the arbitral tribunal. In other words, a manifestly false or conflicting finding alone is not sufficient to annul an international arbitration award. It is necessary to establish that, due to the judicial oversight of the arbitral tribunal, the concerned party was deprived of introducing and proving its position with respect to a procedural issue (BGE 127 III 576 E. 2 f. p. 580; 4A_80/2017 at 4).

Another point to retain is the importance to make a clear, unequivocal and official request for an expert report before the arbitral tribunal if a party is to bring forward a violation of his right to be heard based on this ground at a later stage (i.e., before the Swiss Federal Tribunal, see 4A_80/2017, at 5).

SFT 4A_548/2019 & 4A_550/2019, Judgment of April 29, 2020,
A, B, C v. CAF

Appeal against the CAS Award CAS 2019/A/6348 & 2019/A/6351

This dispute arose between a national football federation, two players (Appellants) and the African Football Confederation (CAF, Respondent) over the African Cup of Nations U17 (CAN U17), an African football tournament organized at the continental level for players under 17, whose first and second teams qualify for the FIFA U-17 World Cup.

The team that finished second, as revealed following a subsequent investigation, included two players not eligible to play because of their age. Following CAF disciplinary decisions that cancelled the disputed match and issued disciplinary sanctions against the team, the third-place team was then ranked as second and thus qualified for the FIFA U17 World Cup in 2019. The decision was confirmed by the CAS in appeal.

In particular, the CAS held that the Appellants should have directed their appeals not only against the Confederation but also against the federation that was qualified in their place. In the subsequent motion to set aside the CAS Award, the SFT considered the admissibility question of legal interest worthy of protection on behalf of the appellants, to the extent that the tournaments had already taken place. The SFT avoided dealing with the question insofar as it eventually dismissed the appeals on the merits.

This is an interesting case showing the conundrum of procedural requirements in disciplinary proceedings involving sports federations. While – normally– a party seeking the annulment of a disciplinary decision of a sports federation will only call the latter as a party (as the only party having “standing to be sued”), the situation is different when the decision affects the rights of a third party. In these cases, the appeal should also imperatively be directed against this third party as co-respondent alongside the sports federation from which the decision emanates, so that the arbitral tribunal can ensure that its right to be heard is respected.

The Appellant attacked the panel’s finding on the “consorité passive necessaire” from the angle of procedural public policy, to the extent that such principle was not based on any applicable procedural rules. The SFT dismissed the plea since, even if the Panel’s decision were to be considered contradictory, it could still not qualify as violating procedural public policy under Article 190 (2) (e) PILA.

SFT Judgment 4A_502/2017 of June 25, 2018, appeal against a CAS Award rendered on July 11, 2017 (CAS 2016/A/4520 & 4521)

The Issue

Before the CAS: Termination of a contract of employment between a football club and a player without just cause.

Before the Swiss Federal Tribunal: The Panel’s assessment of the evidence cannot be reviewed by the Federal Tribunal.

The Facts

The case relates to the termination of a contract of employment without just cause between an Egyptian professional football club X and the professional player A. Club X requested the annulment of a CAS award that awarded the player compensation in the amount of 650’000 USD, partially confirming a previous DRC Decision. The ground invoked for the annulment of the CAS award was the violation of the Club’s right to be heard.

The Findings of the Swiss Federal Tribunal

Violation of the parties’ right to be heard and assessment of evidence by the arbitral tribunal

In essence, the Appellant club alleged a violation of its right to be heard because the Panel refused to add an amount of USD 35’000 to the outstanding debt, even though it had produced other checks to prove that payments had been made to the local tax administration, and the Panel had not questioned these elements of evidence.

The Federal Tribunal dismissed the plea for two distinct reasons. First, questions related to the assessment of evidence cannot be reviewed and fall outside the scope of the plea of the right to be heard. Second, the principal matter related to these payments was discussed only to determine whether the Appellant was entitled to make certain deductions from the Respondent’s salary for income tax purposes. There was therefore no link between this question, which was decided in favor of the Appellant, and the taking into account of checks, copies of which the Appellant produced in order to prove the partial repayment of its debt to the Respondent (at 3.2.1).

The Appellant further submitted before the SFT that the Panel should have reduced the amount by taking into account the Appellant’s internal rules but failed to do so. On this point the Panel found that it was unconvinced of the probative force of the written testimonies by the Appellant to support its claim. In the Appellant’s view, the Panel had failed to take into consideration the Financial List for Football First Team, a document which had been signed by the Respondent. Again, the Federal Tribunal dismissed the argument since it relates to the assessment of the evidence by the CAS Panel, which is non-reviewable by the SFT.

Violation of material public policy for lack of consideration of the principle of Force Majeure

The Appellant referred to the tragic events of the Port Said Stadium riot back in 2012, which had caused more than 70 deaths and were followed by the cancellation of the championship. The events had caused a massive loss of revenue related to sponsorship as well as the sale of tickets for Egyptian football clubs. According to the Appellant, the fact that the CAS Panel did not consider these events as a force majeure constituted a violation of substantive public policy.

Without questioning the gravity of the events, the CAS Panel considered that there was no causal link between the events in Port Said and the failure of the Appellant Club to pay the Respondent’s salary. Furthermore, the Panel found that the Appellant had not raised this argument until much later, without demonstrating that these same events would have led to the non-payment of the salaries of the other players of the team. Again, these findings of the Panel could not be reviewed by the Federal Tribunal and were dismissed as inadmissible without needing to check whether the force majeure falls within the scope of material public policy under Swiss international arbitration law (at 4.2.1).

Violation of material public policy through the violation of the principle of contractual fidelity

Finally, the Appellant endeavored to attack the award from the angle of violation of contractual fidelity due to an alleged misinterpretation of a contractual clause (at 4.2.2). The Federal Tribunal reiterated that such misinterpretation falls outside the scope of the principle of contractual fidelity, which would only be violated if the Panel proceeded to the required imputation after having maintained, as it did, after interpreting the contract, that such imputation was not justified.

The Takeaway

In summary, there are no revolutionary findings in this judgment but only a reminder of the wide powers of the arbitral tribunal to assess the evidence in the circumstances of the case, which cannot be reviewed by the Federal Tribunal under the scope of Art. 190 (2) (d) PILA. Also, even though the principle of force majeure theoretically falls within the scope of public policy (Art. 190 (2) (e) PILA), it is required to substantiate such allegations and show the causal link between the events that constitute the force majeure and the issues at stake.

SFT Judgment 4A_426/2017, Club X v FIFA

Strict admissibility conditions in motions to set aside CAS awards – the requirement of a legally protected interest

Summary of the CAS proceedings that led to the appeal to the Swiss Federal Tribunal

In this judgment the Federal Tribunal reiterated the strict admissibility conditions in motions to set aside arbitral awards, and more particularly the requirement of a legally protected interest (or interest “worthy of protection”). The case involved an appeal against a CAS award (2016/A/4830). The CAS Award was rendered shortly before the FIFA World Cup Russia in June 2017. A football club of Cameroon requested FIFA to postpone the playing of all qualifying matches of the third round of group B “until legality is restored” within the national association (FECAFOOT). The reason alleged was that the national association was not validly represented by its President. According to the Club, this affected the designation of Cameroon’s national team.

The FIFA Secretary General summarily dismissed the request through a letter holding that the case fell outside the jurisdiction of the FIFA bodies due to its internal character. The Club subsequently filed an appeal with the CAS and requested the reprogramming of various matches, appeal dismissed by the CAS, essentially for lack of jurisdiction ratione materiae.

Legally protected interest in the annulment of a CAS award related to a competition that already took place: mission impossible? 

In the subsequent motion to set aside the CAS Award, the Federal Tribunal repeated that an award denying jurisdiction is a final award (as opposed to an interim award), thereby challengeable on all grounds set out in Art. 190 (2) PILA. It further reiterated that arbitrariness is only a ground for annulment within the framework of domestic arbitration (at 2).

Most importantly, however, the Federal Tribunal analyzed its essential admissibility requirement of a legally protected interest in the annulment of the award under appeal in the context of a sporting competition. First, the interest has a practical aspect of this interest, which consists in preventing the appellant from undergoing some damage of an economic, ideal, substantive or other nature that would be caused by the decision under appeal. Second, the interest must exist not only at the time the appeal is made, but also when the decision is issued (Art. 76 (1) b Loi sur le Tribunal Fédéral, LTF).

In the particular case, the alleged interest was linked to the assumption – clearly not sufficient to establish a legal interest – that the national team of Cameroon was not “representative” of the FECAFOOT since the President of the latter was not validly elected. The Club equally failed to highlight the existence of a causal link between the appointment of the leaders of a federation and the “representativeness” of the national team. The Federal Tribunal dismissed all other arguments raised by the appellant club as purely hypothetical and therefore not sufficient to establish a legally protected interest present at the moment of the appeal to the Federal Tribunal (at 3.2.1).

The SFT held that it is technically possible to have several decisions before the enforcement tribunal, particularly when enforcement measures are inefficient. 

Exceptions to the requirement of a present legally protected interest

The Federal Tribunal also highlighted that there are exceptions to the requirements of a present interest in cases where the dispute under appeal may arise again under identical or analogous circumstances, when its nature makes it impossible to adjudicate it before it loses its relevance and when, as a matter of principle, there is a sufficiently important public interest to resolve the issue in dispute (at 3.1). However, the SFT found that these conditions were not met in the case at hand.

Difference between lack of a legally protected interest at the filing of the appeal and a moot appeal (“recours sans objet”)

Finally, even if the appellant had a protected legal interest at the moment of filing of the appeal (which the Federal Tribunal denied), such an interest no longer existed and the appeal would therefore have become moot (“recours sans objet”, at 3.1). The Federal Tribunal reached this conclusion after an analysis of the FIFA World Cup program and in particular the complexity in the organization of the matches.

In summary, assumptions and hypothetical arguments are not sufficient and it is very difficult to establish and substantiate a “present” legal interest in the annulment of a CAS award in cases related to competitions which have already taken place in the past.

SFT Judgment 4A_424/2017 Athlete X. v. World Anti-Doping Agency (WADA) & World Squash Federation

Difference between the violation of ne ultra petita and the violation of the right to be heard (dismissed)

The Facts

On October 2, 2016, the professional squash player X. concluded an “Agreement” with the World Squash Federation (WSF), according to which he admitted having violated the anti-doping rules. He accepted, to this end, a one-year suspension starting on February 7, 2016 as well as the annulment of all the results obtained by him at the 2016 South-Asian Games.

The World Anti-Doping Agency (WADA) subsequently appealed against this “agreement” to the Court of Arbitration for Sport (CAS), which upheld the appeal (number 1 of the operative part). Furthremore, the CAS Panel annulled the sanction stipulated in the Agreement (number 2), imposed a four-year suspension on X. starting on February 29, 2016 (number 3), and rejected all other requests and submissions (number 8). In the subsequent appeal to the Swiss Federal Tribunal, the Athlete X. requested the annulment of the award for violation of his right to be heard and violation of the principle of ne infra petita.

The Swiss Federal Tribunal Judgment

A) The plea of violation of the Athlete’s right to be heard

In his first plea, the Athlete alleged that the Panel failed to examine an argument that he raised. More specifically, the Panel did not examine whether the conditions for a reduction of the suspension for doping to a minimum of two years for “prompt admission” were met in the present case. The conditions for the “prompt admission” are provided for in Art. 10.6.2 & 10.6.3 of the applicable Antidoping Rules. In particular, the Athlete contended that he admitted immediately the infraction of the Anti-Doping Rules of which he was accused (second condition for the application of this provision). The third condition for the application of this provision was the discretionary consent by WADA and the WSF. According to the Athlete, the WSF had given its approval and he had requested WADA’s approval in his answer.

The Federal Tribunal dismissed this argument. It did so because the application of Art. 10.6.2 requires the discretionary consent of both WADA and the WSF. First, the Panel’s finding that WADA refused to give its consent as to the application of this provision is binding upon the Federal Tribunal.

 Second, the Panel found that the (cumulative) conditions for the provision were not met in the case at hand and this resulted in the Panel not applying the provision at issue (therefore there was no violation of the Athlete’s right to be heard). In summary, the fact that the Panel left unanswered whether the Athlete’s prompt admission (one of the two other cumulative conditions) was not relevant in this respect.

B) The plea of violation of the principle of Ne Infra Petita

In a second plea, based on Art. 190 (2) (c) PILA, the Athlete alleged that the Panel omitted to address one of the claims, which would result in a formal denial of justice. The Federal Tribunal proceeded to the interpretation of the word “claims” (“conclusions”, in French) which means all requests and submissions of the parties. However, the plea does not cover the panel’s omission to address a question important for the outcome of the case. This is the difference between a denial of justice / ne utra petita plea and the one of the violation of the parties’ right to be heard.

Furthermore, the Athlete referred to one of his own claims, under which he requested the reduction of the suspension period based on Art. 10.6.3 of the Rules: By not examining the question of his prompt admission (and by not rejecting it in its operative part), the Panel had allegedly violated Art. 190 (2) (c) PILA. In his view, it was not sufficient that the Panel rejected all the other requests and submissions in the number 8 of the operative part of the award.

Again, the Federal Tribunal dismissed this argument after comparing numbers 8 and 3 of the operative part of the award to the reasons of the award, and finding that the CAS Panel had sufficiently addressed the Appellant’s claim.

The Takeaway

Overall, this is a judgment of no particular interest. One point to retain is the difference between the plea of the violation of the parties’ right to be heard and the plea of “ne infra petita”: the former includes the oversight of submissions and legal arguments that were regularly raised and they could have influenced the outcome of the case. The latter refers to the Panel’s omission to address one of the claims (all requests and submissions) but not the Panel’s omission to address a question important for the outcome of the case. As found in a previous judgment, there is a distinction between claims / requests (“Rechtsbegehren”) and pleas in defense of one’s claims (“Verteidigungsmittel”).

SFT Judgment 4A_312/2017 Football Club X. v. A.

Compatibility of an Agent’s Commission Fee with Public Policy

The Issue
Validity of a football agent’s (intermediary’s) total commission fee for the signing of a football player with a club that represents ten times the agreed annual salary of the player under Swiss law – Compatibility of such a commission fee with substantive public policy (Art. 190 (2) (e) PILA.

The Facts
Following an award rendered by the Court of Arbitration for Sport (CAS) on April 19, 2017, the professional football club X. (the Club) was ordered to pay to the former player’s Intermediary A. (the Intermediary) the outstanding amount of a commission of EUR 2’700’000, plus interest, according to the contract concluded on August 23, 2013 (the total commission fee was EUR 3’100’000). As per the contract, the Intermediary undertook to ensure the transfer of Player B. to the Club for the payment of a commission. The transfer took place in 2014 and the Player joined the Club for a duration of five years for a total remuneration of EUR 1’360’000 (EUR 272’000 annually).

The proceedings before the Swiss Federal Tribunal
The appeal of Football Club X. to the SFT
The Club subsequently filed an appeal to the Swiss Federal Tribunal (SFT Judgment 4A_312/2017 of 27 November 2017) requesting the annulment of the award for violation of substantive public policy (Art. 190 (2) (e) Private International Law Act, PILA).¹ It alleged that by validating a contract that included an excessive commission fee, the CAS Panel violated the principle of public policy. It argued that the agreement was a brokerage contract on the placement of an employee with an employer. This is a sensitive and regulated area under Swiss law (which was the law applicable to the merits under Art. R45 CAS Code).

More specifically, the Club considered excessive the payment of EUR 3’100’000, compared to the salary of the Player for a period of five years which was EUR 1’360’000. This commission represented 228% of the salary of the Player for the full duration of the employment contract, i.e., more than ten times the annual salary of the Player. According to the Club, by allowing a commission that was grossly disproportionate to the Player’s salary violated public policy. More particularly, it violated the prohibition of excessive commissions in the field of brokerage for the placement of a worker (at 3.2.2).

The SFT judgment

Not a specific notion of public policy adapted to sports / football

The Swiss Federal Tribunal proceeded to a detailed analysis of the plea invoked but refused to make a general statement as to when high commission fees are “excessive”. It held that each case is different and it has to take into account the specific circumstances of each case. Referring to a previous judgment related to the transfer of a football player, the Federal Tribunal found that the particularities of sports and more particularly football should not create a specific notion of substantive public policy, since this would also contravene the principle of legal certainty when it comes to the definition of this concept. Furthermore, and even though sports arbitration bears some particularities compared to commercial arbitration (e.g., with respect to the waiver of the right to appeal, ATF 133 III 235 at 4.3. 2.2, p. 244), these particularities should not extend to the concept of substantive public policy (at 3.3.2).

Mandatory provisions under Swiss law and violation of public policy under Art. 190 (2) (e) PILA

Another point that was dealt with by the Federal Tribunal was the issue of contractual penalties and the duty of the judge to reduce them when they are excessive under Art. 163 (3) Swiss Code of Obligations (CO) (at 3.3.3).  Even though this is a mandatory provision under Swiss law (meaning that the judge should apply it even in the absence of a request by the parties concerned), like Art. 417 CO and other mandatory laws, its violation does not amount to a violation of public policy of Art. 190 (2) (e) PILA.

Placing the commission fee into a broader context

Importantly, the Federal Tribunal endorsed the CAS Panel’s view in that the determination of a commission fee as excessive should not be made by the comparison of the amount to the agreed salary of the player, nor should there be a fixed percentage for the placement of workers irrespective of the other circumstances surrounding the case (at 3.3.3).

The Federal Tribunal repeated the analysis made by the CAS Panel, which consisted of placing the commission fee into a broader context: even though the amount of EUR 3’100’000 seemed too high compared to the annual salary of the player (more than ten times higher), the Club is a renowned football club that discovered a young footballer and employed the services of the Intermediary in order to conclude the contract of employment. The parties agreed on the amount in writing and the Club waited until the claim to the CAS in order to argue that this amount was excessive.

Doctrine of unforeseeability vs. principle of contractual fidelity 

Moreover, the SFT opined, that it is not possible to oppose the doctrine of unforeseeability (clausula rebus sic stantibus) to the principle of contractual fidelity (pacta sunt servanda). This is so because the potential of a player cannot be considered as an “unforeseeable” circumstance. The Federal Tribunal found that the factual findings of the CAS Panel bind the Court (at 3.3.4.2). Also, it found that the Club failed to establish how the payment of the commission fee to the Intermediary would suppress its economic freedom to such an extent that it would endanger the basis of its existence.

Overall, it endorsed the CAS Panel’s position and found that, by allowing the commission fee, the CAS Panel did not violate substantive public policy.

The Takeaway: No Specific Notion of Public Policy in the field of Sports Arbitration / Football

This is an interesting case where the Federal Tribunal confirmed that substantive public policy should not be adapted to the specific field in question, in casu the field of sports and, more particularly, football, since this could lead to lack of legal certainty. It also found that it is not possible to issue general criteria as to when commission fees are excessive (in violation of Art. 190 (2) (e) PILA). It should rather examine each case separately, based on the particular circumstances at issue.

While the Appellant Club pleaded for the applicability of specific Swiss laws prohibiting excessive commissions in the field of brokerage for the placement of workers, the Federal Tribunal held that Art. 27 (2) CC generally covers similar abuses. Art. 27 prohibits the contractual restriction of the economic freedom, which however is excessive only when it suppresses the economic freedom of the party concerned to such an extent that it would endanger the basis of its existence.

An interesting procedural point of the judgment relates to the facts established in the arbitral award that generally bind the Federal Tribunal: it is not necessary for the findings to appear in the factual summary of the award but they can also be part of its legal reasoning.²

The FIFA Regulations on working with Football Intermediaries

Overall, the Federal Tribunal reiterated the limited scope of substantive public policy, notwithstanding the particularities of sports arbitration and refrained (as did the CAS Panel in its award) from issuing a definitive opinion on when a commission fee is excessive. However, it must also be noted that the FIFA Regulations on working with Intermediaries³that set limits to the total commission fee (and which the Panel did not apply because they were not yet in force at the time of the relevant facts) should somehow clarify the situation and regulate this field, at least when it comes to the cases falling within the scope of the FIFA Regulations.

SFT Judgment 4A_592/2017 Agent A. v. Football Club B.

Agent A. v. Football Club B. – The Issue

1) The plea of violation of the right to be heard is not an end in itself – the impact on the outcome of the case must be established

2) Request for legal aid is possible in setting aside proceedings before the SFT, but is to be dismissed when there is no chance of success

The Federal Tribunal Judgment

The case concerned the payment of EUR 84’764 for the transfer of a player and other expenses from Club B to the professional players’ Agent A. After an unsuccessful claim before the Single Judge of the FIFA Player’s Status Committee, Agent A filed an appeal to the Court of Arbitration for Sport (CAS), which dismissed the appeal after interpreting the contract under Swiss law.

A) Violation of the parties’ right to be heard & the principle of equality of the parties

In the subsequent appeal to the Swiss Federal Tribunal, Agent A alleged the Panel’s violation of the principle of equality of the parties and the right to be heard in adversarial proceedings (Art. 190 para. 2 (b) PILA). The Federal Tribunal reiterated that the right to be heard is a constitutional guarantee with a formal character, i.e., independently of the chances of success of the appeal itself (at 4.1.1 f.). However, such right is not an “end in itself”. It rather serves as a means to avoid an arbitral procedure that will result in an erroneous judgment due to the fact that the parties could not participate in the procedure. This is particularly so when it comes to the administration of evidence.

In this respect, and notwithstanding the formal character of that right, it is important to show the impact of such violation on the arbitral proceedings (see also SFT 6B_986/2016 of September 20, 2017, at 1.4.1). This means that the party alleging such violation must prove that all facts, proof and legal arguments brought forward but disregarded by the arbitral tribunal could influence the outcome of the case. By the same token, in case of alleged violation of the equality of the parties, it must at least be shown how the proceedings would be different if the alleged violations of the right to be heard had not been committed.

B) Need to provide reasons for the violation of the parties’ right to be heard

In the case at hand, the Federal Tribunal found that Agent A simply referred to the violation of his right to be heard for being refused to exercise his right to reply. The Appellant equally referred to the proceedings and the arguments raised by the Sole Arbitrator for refusing to take into account the evidence submitted after the answer of the respondent (at 4.2.1). He criticized said arguments from the perspective of the parties’ right to be heard (under Art. 190 (2) (d) PILA). However, the Federal Tribunal held that these vague statements

More specifically, the appeal was manifestly inadmissible (for lack of reasoning) and thereby the chances of success criterion of Art. 64 para. 1 LTF was obviously not fulfilled. Even in less straightforward cases,

this condition would be very difficult to meet given that the “usual” chances of success in proceedings to set aside an arbitral award are less than 10%.

4A_170 / 2017 & 4A_194 / 2017 , Judgment of May 22, 2018, Club L. v. FECAFOOT and FECAFOOT v. Club L. Appeal against the CAS award rendered on February 27, 2017 (CAS 2016/A/4415)

The Facts 

The case before the CAS involved a dispute between a Cameroonian football club playing in the first division (Etoile Filante de Garoua, the Club) and the national football federation FECAFOOT. Within a larger context of difficulties facing FECAFOOT since its 2013 elections and a series of related CAS awards, the Club filed an appeal to the CAS (TAS 2016/A/4415) requesting, inter alia, the reinstatement of the Executive Committee until the final elections. In a preliminary award on jurisdiction and admissibility, the Sole Arbitrator held that the CAS had jurisdiction ratione materiae, but the appeal was inadmissible for being late.

Time Limit to Appeal to the CAS (Art. R49 CAS Code)

The entire debate before the Federal Tribunal related to the time limit to appeal to the CAS. According to Art. R49 of the CAS Code, in the absence of a time limit in the rules of the federation, the time limit for appeal is twenty-one days from the receipt of the decision appealed against. The Sole Arbitrator found that there was a contradiction in the relevant rules and statutes of the federation but the rule in force at that time provided for 20 days, and, therefore, the appeal was inadmissible for being filed after 21 days.

Before the Swiss Federal Tribunal, the Appellant club invoked a violation of its right to be heard, erroneous finding on jurisdiction and a violation of public policy (which was swiftly dismissed and does not merit any further mention).

Time Limit to appeal and Violation of the Right to be Heard: Conditions

The only relatively interesting point from the angle of the violation of the right to be heard is the need to draw the attention of the arbitrator to the specific piece of evidence or argument made during the proceedings. In this respect, the Federal Tribunal found that it was not sufficient to file the CAS award in which the Panel had admitted a time limit of 21 days, but the Appellant had to draw the attention of the Arbitrator to the specific argument raised. Moreover, the appellant’s allegation that the operative part of the decision indicated 21 days to appeal to the CAS could not be traced in the award under appeal.

Lack of Jurisdiction “ratione temporis” or Inadmissibility?

In an argument raised by the Appellant from the angle of jurisdiction ratione temporis, the Federal Tribunal left, once again, the question whether the late filing of the appeal entails the inadmissibility or the dismissal for lack of jurisdiction open (5.2).

Legal Interest of the Appeal filed by FECAFOOT

As regards the appeal filed by FECAFOOT (that the Federal Tribunal decided to join to the appeal filed by the Club), it was found that FECAFOOT lacked legal interest because the argument raised (the lack of legitimacy of the CAS Award and the detrimental effect of its publication in Cameroon) could not be found in the arbitrator’s findings and was thus inadmissible. In any event, such argument was insufficient to establish the legal interest of this association in appealing against the disputed award.

Australian Football (“Essendon”) Doping Case / De novo review by the CAS – objection to the full power of review

SFT Judgment 4A_102/2016, A, B, C et al v. WADA, AFL & ASADA

The Issue in Essendon 

Before the CAS: De novo review of a doping-related decision (“Essendon”) by the CAS Panel – violation of the anti-doping regulations

Before the SFT: Objections of the Essendon Players to the scope of review of the arbitral tribunal

The Facts in the Essendon CAS appeal

This Federal Tribunal judgment was the last step in a long series of proceedings over the widely known supplement program of the Australian Rules Football Club Essendon (the Club). The 34 players (the Appellants) were all professional players for the Essendon Club in the Australian Football League. The Club introduced a program of supplements for its players in September 2011, administering injections and allegedly using a prohibited substance. After ASADA’s initial investigations and the AFL proceedings against the Appellants, the AFL Anti-Doping Tribunal rendered a decision on March 31, 2015 finding that there was no evidence of a violation of the applicable Anti-Doping Regulations.

WADA subsequently filed an appeal to the Court of Arbitration for Sport (CAS), and the Panel was composed of the Hon. Michael J. Beloff QC, Romano Subiotto QC and the Hon. James Spigelman QC. AFL and ASADA were also allowed to participate in the proceedings. Pursuant to Art. R57 of the CAS Code, the CAS held that it would decide on the appeal de novo and would also take into account new evidence filed by all parties involved. The Panel ruled through a final award rendered on January 11, 2016, finding that the players were in violation of the relevant Anti-Doping Regulations imposing a two-year ineligibility period.

The appeal to the Swiss Federal Tribunal against the Essendon CAS Award

Existence and Scope of the Arbitration Agreement in the Essendon case: Full Power of Review (Art. R57) vs. Limited Review in Appeal

In the civil law appeal to the Federal Tribunal, the Appellants principally requested the annulment of the CAS Award for lack of jurisdiction. In essence, the Appellants alleged that due to the de novo assessment, the CAS Panel exceeded its jurisdiction (Art. 190 (2) (b) PILA) and, alternatively, it violated public policy (Art. 190 (2) (e) PILA). More specifically, at the relevant time, the 2010 version of the AFL Anti-Doping Code provided for a limited review in appeal (i.e., error in law, “unreasonableness” and manifest disproportionality). The full power of review came only after the 2015 version of the rules, which however was not applicable at the relevant time of the facts.

After reiterating the general principles applying to arbitration clauses under Swiss law, the Federal Tribunal proceeded to the interpretation of the “defective” arbitration clause in question according to the principle of good faith (i.e., the presumable will in the way it would and had to have been understood, in good faith, by the respective recipient of the declaration). Accordingly, once it is established that the parties wanted to exclude the dispute from state jurisdiction and submit it to arbitration, the principle of utility applies in order to give to the arbitration clause a meaning that would “save” the arbitration clause. The Federal Tribunal reiterated the fact that a jurisdictional defense must be raised before the submission to the merits (“Einlassung”) in accordance with the principle of good faith.

Initial jurisdictional Objections of the Essendon Players fail upon subsequent signing – without reservation – of the Order of Procedure

In the particular case, the Appellants initially raised their objections as to the de novo review of the Panel but did not subsequently question the power of review by the CAS after the latter decided to review the case de novo and hear new evidence (3.3). The Appellants even signed – without reservations – the Order of Procedure according to which the CAS Panel would decide the case in compliance with the CAS Code. They subsequently made full use of the de novo hearing, by submitting new pieces of evidence (including expert opinions) and insisted upon extensions concerning the backgrounds of certain laboratory tests, without making any reservation.

Relationship between Article R57 CAS Code (de novo) and the Regulations of the National Association

The Federal Tribunal also made an interesting comment with respect to the relationship between the CAS Procedural Rules and the specific regulations of the national association and noted that Article R57 of the Code (de novo review by the CAS Panel) did not foresee any reservation giving priority to the respective regulations of national associations. The Federal Tribunal concluded that the Appellants had lost their right to appeal and rejected the appeal.

As a side note, the Federal Tribunal also found that Article R57 of the CAS Code is a binding procedural provision, particularly in doping cases, it is used in order to ensure the observation of international standards within the worldwide fight against doping and a standard application of the relevant anti-doping regulations. Even if the view of the Appellants were to be retained with respect to the application of the national regulations (providing for narrowly defined grounds for appeal) notwithstanding the compulsory procedural rules of the CAS (providing for a full power of review), the arbitration agreement would still not be null and void per se but would be an agreement with “partially-impossible content” (BGE 138 III 29 at 2.3).

The Takeaway

Overall, this is an important judgment; it is interesting to note that the Appellants merely challenged the scope of the arbitration agreement — and not its existence. Another interesting point to retain is that – even if a party raises its objections with respect to jurisdiction at an early stage of the proceedings, its subsequent behavior and, particularly, the signing of the order of procedure without reservations will preclude such party from objecting to the jurisdiction / scope of review at the setting aside proceedings.