In this new entry of bratschi's blog series on sports arbitration, Marco and Elisa summarize and briefly comment on the decisions of the Swiss Federal Court (SFC) in sports arbitration published in November 2023. All of the decisions relate to awards of the Court of Arbitration for Sport (CAS):
Decision 4A_2/2023 of 6 October 2023: late filing of an appeal with the CAS is not a question of jurisdiction but of admissibility - DISMISSED
Facts: A dispute arose between a Hungarian football club (Club) and a professional football coach (Applicant or Coach) after the Club terminated the employment contract with the Coach with immediate effect for good cause, arguing misconduct. The employment contract stipulated an arbitration agreement whereby the parties agreed to «submit themselves - in the cases set out in the regulations of MLSZ and FIFA - to the competent department of MLSZ and FIFA, in the case of labour disputes to the competent Administrative and Labour Court and in every other case to the Permanent Court Arbitration pursuant to Section 47 of the Sports Act.» Following the termination of the employment contract, the Coach filed a claim with the FIFA Players' Status Chamber (FIFA PSC), arguing, «inter alia», that the employment contract was terminated by the Club without just cause and requesting outstanding salary and damages. The Single Judge of the FIFA PSC partially upheld the Coach’s claim. The Club appealed to the CAS, alleging that the FIFA PSC had no jurisdiction and that the state courts were competent to decide on the matter. The CAS upheld the appeal, set aside the decision of the FIFA PSC and declared that FIFA PSC had no jurisdiction to rule on the Coach’s claims. The Coach then filed a set-aside application with the SFC requesting the annulment of the CAS award (i) for incorrect refusal to assert jurisdiction (Article 190(2)(b) PILA) and (ii) for violation of public policy (Article 190(2)(e) PILA). The SFC dismissed the application.
Decision: Regarding the plea of incorrect refusal to assert jurisdiction, the SFC first recalled its case law according to which – contrary to the Applicant’s argument – the time limit to file an appeal before the CAS is not a question of jurisdiction but an issue of admissibility, to which Article 190(2)(b) PILA is not applicable. The SFC moved on ruling that the CAS had correctly decided that the FIFA PSC lacked jurisdiction based on the arbitration agreement in the employment contract and Article 22 of FIFA Regulations on the Status and Transfer or Players (RSTP). In particular, the SFC considered that the Applicant could not rely on the negotiation phase of the employment contract to allege that the parties had concluded an arbitration clause, as the CAS award – which was binding on the SFC – was silent in that respect. The SFC explained that the CAS panel correctly ruled that a parties’ waiver of the jurisdiction of state courts cannot be assumed lightly but should rather be restrictively construed. The SFC then ruled that the CAS rightfully considered that the arbitration clause should be interpreted in good faith to the effect that the parties, by expressly referring to labour disputes to be submitted to the competent state court intended that the state courts shall be exclusively competent for employment disputes. In sum, the SFC concluded that the CAS had correctly rejected jurisdiction, in that it could not be competent on appeal if the FIFA PSC had no jurisdiction in the first instance. Regarding the purported violation of public policy, the SFC swiftly rejected this ground as well, «inter alia» recalling that the principle of «res judicata» does not apply to decisions of internal bodies – such as the FIFA PSC – of international sports federations.
Commentary: The decision confirms the case law of the SFC that a belated filing of an appeal before the CAS is a question of admissibility and not jurisdiction and is, therefore, not a ground to set aside an arbitral award on the basis of lack of jurisdiction in the first place (see also decision of the SFC 4A_413/2019 of 28 October 2019). The decision also confirms that the parties’ willingness to waive the jurisdiction of a state court must be interpreted restrictively.
Decision 4A_300/2023: pacta sunt servada and right to be heard
Facts: A Portuguese football coach (Coach) entered into an employment contract with a national football federation to be coach of its national football team. The Coach signed the employment contract with the president of the national football federation and the Ministry of Sports. According to the employment contract, the coach was hired to among others do «everything possible to win the Africa Cup of Nations 2021». The national football club eventually finished 3rd at the Africa Cup of Nations 2021. Some days after, the Ministry of Sports confirmed in an interview that the Coach would retain his position as head coach. However, the day immediately after, the president of the national football federation notified the Coach his dismissal. On the same day, the Ministry for Sports and the president of the national football federation both issued a press release disclosing this information. The Coach filed a claim with the FIFA PSC against the national football federation, who was ordered to pay the Coach around EUR 1,500,000 for outstanding salaries, bonus and compensation for termination without just cause. The appeal to the CAS having been dismissed, the national football federation filed a set-aside application of the CAS award before the SFC, alleging a breach of the principle of «pacta sunt servanda» as part of substantive public policy (Article 190(2)(e) PILA). According to the federation, the CAS award breached the principle of «pacta sunt servanda» in that it held that the federation was responsible for paying the Coach’s salary, even though the CAS panel previously emphasized that contractual obligations of a financial nature were the responsibility of the Ministry of Sports. Further, the federation pleaded the violation of its right to be heard because, allegedly, the CAS panel ignored the argument that the parties had agreed that the financial obligations arising from the employment contract were the exclusive responsibility of the Ministry of Sports. The SFC dismissed the application.
Decision: Regarding the plea of breach of substantive public policy, the SFT recalled that according to its case law, the principle of «pacta sunt servanda» is only violated if the arbitral tribunal refuses to apply a contractual clause while admitting that it binds the parties or, conversely, if it imposes on them compliance with a clause which it considers not to bind them. In other words, the arbitral tribunal must have applied or refused to apply a contractual provision by contradicting the result of its interpretation of the existence or content of the disputed legal act. Importantly, the interpretation process itself, and the legal consequences that are logically drawn from it, are not governed by the principle of «pacta sunt servanda», so that they cannot give rise to a complaint of violation of public policy. The SFC concluded that the Applicant was in fact challenging the contract interpretation conducted by the CAS panel, which under Swiss law is not possible in a set-aside application against an international award. Regarding the violation of the right to be heard, the SFC swiftly dismissed it for being manifestly appellatory.
Commentary: This decision is a good reminder that, although the principle of «pacta sunt servanda» forms part of substantive public policy under Swiss law, in practice, most disputes arising from the breach of a contract which are brought to an arbitral tribunal having its seat in Switzerland are excluded in our review from the protection of the «pacta sunt servanda» principle by the Swiss Federal Court. So far, the SFC has always refused to set aside an international award for breach of this principle. The chances to obtain the annulment of an award based on the principle of «pacta sunt servanda» from the Swiss Federal Court are then remote.
Decision 4A_464/2023 of 20 October 2023: impossibility to request before the SFT the substantive review of a CAS award - DISMISSED
Facts: On 21 August 2023, the CAS decided not to hear an appeal filed by a coach (Applicant) against a decision of the FIFA Disciplinary Committee because the appeal was filed too late. The Applicant had filed the appeal with the CAS on 30 May 2023, 4 days after the deadline lapsed on 26 May 2023, requesting that the deadline be restored in his appeal, alleging his legal representative’s illness as a ground for such request. The CAS denied the request to restore the deadline, ruling that the illness of the legal representative had not prevented the Applicant from filing the appeal within the deadline because the health issues had occurred already at the beginning of the deadline for the appeal and were therefore not unforeseeable. The Applicant filed a set-aside application with the SFC requesting the annulment of the CAS award for violation of his right to be heard (Article 190(2)(d) PILA). The Applicant argued that his legal representative suddenly suffered severe pain in the afternoon of 24 May 2023, i.e., only two days before the deadline, and that that prevented the representative from filing the appeal within the deadline. By ignoring this argument, the CAS allegedly violated his right to be heard. The SFC dismissed the application.
Decision: The SFC dismissed the Applicant’s argument rather swiftly. The SFC not only considered that the CAS had explicitly taken into account this argument, but also concluded that in this case the severe health issues occurring before the deadline were foreseeable. The SFC ruled that the Applicant’s argument was in fact appellatory, which under Swiss law is not acceptable in a set-aside application of an international award.
Commentary: The decision of the SFC confirms that the right to be heard cannot be invoked to obtain a substantive review of an international arbitral award by the SFC. The decision also serves as a reminder that the assessment of the evidence and arguments by an arbitral tribunal cannot be challenged under the pretext of the right to be heard.