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Sports Arbitration Revisited Pt II: Mutu and Pechstein v Switzerland

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About The Author

Ben Cisneros (Regular Writer)

Ben is a third-year law student at Selwyn College, Cambridge, currently spending this year studying law at the Universidad Autónoma de Madrid as part of the Erasmus scheme. He has a keen interest in Sports law, and is a future trainee of boutique firm, Morgan Sports Law. Outside of academia, Ben is a keen singer and actor with a unflinching love of Wasps and England rugby.

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At all events, arbitration is more rational, just, and humane than the resort to the sword.

Richard Cobden

As explained by the first article of this two-part Keep Calm Talk Law series, the case of Mutu and Pechstein v Switzerland [2018] is highly significant. Indeed, this author believes that the case has the potential to be the most significant Sports Law decision since the European Court of Justice's famous Bosman [1995] ruling, particularly if – as is likely – it is referred to the Grand Chamber of the European Court of Human Rights (ECtHR).

Following on from Part I, this article aims to provide a comprehensive analysis of the Mutu and Pechstein [2018] decision, taking account of the dissenting judgment, and will consider the possible impact that it might have on the future of arbitration in sport. 

Forced Arbitration

The first, and most fascinating, point to emerge from this case is that regarding 'forced' arbitration. In a previous article for Keep Calm Talk Law, this author noted the artificial nature of consent to arbitration in sport. Given the way in which arbitration clauses are often imposed on a ‘take it or leave it’ basis, through the Regulations of Sports Governing Bodies (SGBs), the idea that any ensuing arbitration is consensual is wholly unrealistic and poses a potential threat to human rights.

Nonetheless, a number of courts - such as the English Court of Appeal in Stretford v The Football Association [2007] - have typically held them to be consistent with Article 6(1) ECHR. This was owing in part to the strict approach taken in the ECtHR case law.

In Tabbanne v Switzerland [2016] for example, the ECtHR held that arbitration clauses would only be considered involuntary and therefore an ineffective waiver of human rights, if they were “required by law”. However, in Mutu and Pechstein [2018], the ECtHR departed from this position and took a more contextual approach, stating that an arbitration clause would be involuntary wherever consent to it was not “free, lawful and unequivocal”.

This is a significant change, and one which is more in line with the judgment of the Spanish Supreme Court in Roberto Heras [2012]. Indeed, this ‘tougher’ position on forced arbitration clauses should be welcomed, as it does away with the myth of consent, allowing for a more intellectually honest review of such clauses.

As a result, in order to avoid a possible ECHR violation, the Court held that any arbitration resulting from a 'forced' arbitration clause must comply fully with Article 6(1). This has potentially profound ramifications for Sports Governing Bodies (SGBs) and Sports Law as, to comply with Article 6(1) fully, the arbitration panel must be a “tribunal established by law”. Typically, arbitration panels are not so considered. Therefore, any SGB using a forced arbitration clause, could be violating Article 6(1).

Of course, if such a prima facie breach was established, a court would then have to consider whether or not it was justifiable as being a proportionate pursuit of a legitimate aim. As suggested by this author previously, it is likely that a court would hold that arbitration by a specialised panel (not a court) is justified, particularly in light of the decision of the German Federal Court (BGH) in DESG and ISU v Pechstein [2016].

Indeed, the Court in the instant case (somewhat randomly) noted (at paragraph 98) that:

there is a definite interest in the fact that disputes arising in professional sports, in particular those with an international dimension, may be [referred] to a specialised court which is able to make decisions quickly and economically. Indeed, high-level international sporting events are organised in different countries by organisations with headquarters in different states, and are often open to athletes from around the world. The use of a single, specialised international arbitral tribunal facilitates a certain procedural uniformity and enhances legal certainty.

However, it would always be open to a court – particularly given the stricter approach taken in Mutu and Pechstein – to find that forced arbitration clauses were not a proportionate way of pursuing the aim of having such a specialised panel. It could be argued that it would only be proportionate if the clauses were either based on true consent, or if they offered an ‘opt-out’ to accede to the ordinary jurisdiction (as in Mutu’s case).

Therefore, it is submitted that, in order to guard against the possibility of litigation, and to better reflect the consensual nature of arbitration, SGBs would be better off including a ‘right of refusal’ in their arbitration clauses. After all, it would make no difference in cases where arbitration was truly in the best interests of both parties.

However, the Court in the instant case side-stepped this issue by – surprisingly – finding that CAS constituted a “tribunal established by law”.

Is CAS really a “court”?

The dissenting judgment (delivered by judges Keller and Serghides) questioned whether sufficient consideration had been given to this point. As it observed, the question of whether an arbitral tribunal can be considered a “tribunal established by law” has rarely arisen before the ECtHR. In the one case on the point, Suda v Czech Republic [2010]:

the Court held that the arbitral tribunal had not been "established by law" because, on the one hand, it had been composed of arbitrators who appeared on a list drawn up by a limited liability company and, on the other hand, that it was based on an arbitration clause.

Conventionally, “established by law” is considered to mean “established by statute”. This orthodox interpretation makes sense because the ECHR was initially drafted to prevent against human rights abuse by States after the Second World War. As such, a right to a court “established by law” was vital, as opposed to a court “established by decree”. “Established by law” implies that the court has been established via the democratic process. As the dissenting judgment adds (at paragraph 23), following the case of Lindner v Germany [1999]:

Article 6 of the Convention [does] not require the "legislator to regulate every detail … [by] a formal Act of Parliament …provided, however, that it provides at least the organisational framework of the judiciary.

Furthermore, the dissenting judges noted (at paragraph 22):

The CAS is an arbitration institution with no legal personality … which is part of ICAS, which itself is a Swiss private-law foundation…The CAS thus resembles the arbitral tribunal described in Suda.

Nevertheless, the majority in Mutu and Pechstein stated (at paragraph 94):

This right of access to a court does not necessarily imply the right to be able to access a conventional type of court, integrated into the ordinary judicial structures of the country; thus, a body to decide a limited number of specific disputes can be analysed as a court provided it offers the necessary guarantees.

If this is the proper interpretation of Article 6(1), then it is a landmark decision, as there is no clear precedent to support it. The argument made – that CAS “enjoyed full jurisdiction to consider the basis of norms of law…” etc. – has a certain appeal, but it is nevertheless unclear whether this truly means it is “established by law”.

The Court’s finding leaves many questions. Primarily; how many other arbitration panels (sporting or otherwise) would also be considered “tribunals established by law”? Surely a sports disciplinary committee wouldn’t be considered a court? As the dissenting judgment states, the Court “should have given some guidance as to the conditions under which private entities may be [so] considered”. The uncertainty the Court leaves means it is possible that there are many other private tribunals which will be subject to the ECHR – the ‘European Court of Arbitration’, for example.

Of course, ordinarily, an agreement to arbitrate purports to waive rights under Article 6 anyway – it aims to avoid state/public courts, and instead keep proceedings private (subject to specific requests to the contrary). It therefore seems odd that an arbitral panel is classified as, for all intents and purposes, a public court.

To this author, it seems that the focus of the Court should instead have been on the purported waiver, and whether this was compliant with Article 6(1). If the “forced arbitration” clause in Pechstein’s case had been found to amount to a violation (in light, perhaps, of concerns about the fundamental guarantees provided by CAS) then the whole proceedings could have been declared, in effect, a nullity. Instead, by shifting the focus to whether CAS could satisfy each requirement of Article 6(1), the law has become incredibly uncertain.

From the tone of the dissenting judgment, particularly on this point, it seems unlikely that the decision will not be referred (appealed) to the Grand Chamber.

The Independence of CAS

Given that the Court found CAS to be a “tribunal established by law”, it was able to rule on whether or not CAS was “independent and impartial”. As explained in Part I, the Court ruled that it was. The dissenting judges, however, disagreed.

The dissent focused on the way in which the arbitrator selection system functioned, at the material time, under Article S14 of the Code of Arbitration. As the majority explained (at paragraph 153), the list of possible arbitrators had to be composed as follows:

three fifths … from among the persons nominated by the [International Olympic Committee], the [International Sports Federations] and the [National Olympic Committees]; a fifth … selected by ICAS "after appropriate consultation, with a view to safeguarding the interests of the athletes"; and a fifth chosen, still by ICAS, from [people who are independent] of the above-mentioned bodies.

[ICAS (the International Council of Arbitration for Sport) is the body which governs CAS]

The dissenting judges considered that this amounted to “disproportionate and unjustified ‘influence’” of international sports organisations over the arbitrator selection process – a link, the judges argued, which the majority failed to make.

The majority had also noted (at paragraph 154):

ICAS itself was composed entirely of personalities from these bodies…which reveals the existence of a certain link between ICAS and organisations likely to oppose athletes during any disputes brought before the CAS, particularly of a disciplinary nature.

This is a link the dissent considers both “troubling” and one from which the majority “failed to draw the necessary conclusions”. Judges Keller and Serghides continue by suggesting that the majority focused too much on “influence” being proved “in an individual capacity” rather than looking at the appearance of the organisation’s structure as a whole. Taking such a view, the dissent finds that “CAS is devoid of the appearance of independence” and “does not offer the guarantees of Article 6(1)”.

Indeed, on this evidence, it is hard to disagree. The nominees of international sports organisations were given over half of the places on the CAS arbitrators list, while the remaining two fifths were ultimately to be chosen by ICAS; a body composed essentially of and by those associated with international sports organisations – the very same international sports organisations who typically oppose athletes in disputes before CAS.

It seems to be a clear example of the appearance of a lack of independence. As the dissent points out (at paragraph 13), “appearance” is a key part of determining whether a court is “independent” (Campbell and Fell v UK). Keller and Serghides suggest that “an employment tribunal composed (almost) exclusively of employers' representatives” would not be acceptable “even if the representative in this case was impartial”; an analogy there is no reason not to apply in the instant case.

As above, given the strength of the dissenting judgment, it is highly likely that there will be a referral to the Grand Chamber on this point.

Public Hearings

The fact that a violation of Article 6(1) was found due to CAS’s refusal to give Pechstein a public hearing, despite her explicit requests for one, is not controversial. Though arbitration is usually private, the fact that one party wished for it to be public but had no choice but to submit to a private hearing, suggests a clear impropriety.  This ruling serves as a reminder to parties that they have the right to a public CAS hearing – should they want one.

Had Pechstein not requested a public hearing, the outcome would likely have been different. Although Article 6(1) provides for public hearings, there are plenty of reasons why it would be justified not to hold one – such as the desires of both parties of an arbitration to keep proceedings private.

What does this mean for Adrian Mutu?

Given that Mutu failed in his arguments regarding the partiality/lacking independence of two of the arbitrators in his CAS hearing, it might be thought that the ECtHR decision is the end for his legal fight. However, the dissent points out an inconsistency in the Court’s reasoning which may give him a ground to request a referral to the ECtHR Grand Chamber.

Though the Court considered the arbitration clause not to be forced, it did find that his waiver of his Art.6(1) rights had not been “unequivocal” (at paragraph 122). However, it then (at paragraph 160) seems to exclude his case from arguments relating to the structural independence/impartiality of CAS, as he had not specifically complained of it. If the Grand Chamber was to overrule the Court and find that CAS was not sufficiently independent/impartial, Mutu would be prejudiced if it did not also consider there to be a violation in his case.

In fact, there would be many, many athletes who, if such an appeal was successful, could lodge similar complaints.

Conclusion

As will be evident from the above analysis, the Mutu and Pechstein decision raises many questions. Though the decision, on the face of it, confirms the authority of CAS, it is far from satisfactory. Indeed, the dissenting judgment notes that the structural problems of the institution “should have been subject to a stricter examination” and (at paragraph 30) that this:

case raises [a number of] serious questions concerning the interpretation or application of the Convention (...) or a serious question of a general nature" within the meaning of Article 43 § 2 of the Convention.

Article 43(2) ECHR gives the criteria which must be fulfilled for a referral to be made to the Grand Chamber. Therefore, the above statement from judges Keller and Serghides must be viewed as an invitation to the parties to request such a referral. Given that Claudia Pechstein and her legal team have pursued every possible legal avenue in an attempt to clear her name, it seems unlikely that they will stop now. A final legal battle seems likely.

A Grand Chamber decision would be a defining moment for Sports Law. Not only would it give recognition to the field in one of the world’s highest courts, but it would also determine the future of sports arbitration. If the Grand Chamber was to find that CAS is indeed a “tribunal established by law”, there would then be a fascinating discussion about both how such tribunals are to be defined, as well as a final word on whether or not CAS satisfies the requirements of independence and impartiality under Article 6(1). On the other hand, if the Grand Chamber found that CAS was not a “tribunal established by law”, there would be an equally fascinating discussion of whether or not “forced arbitration clauses” amount to justifiable breaches of the ECHR.

Either way, it would be a seminal moment.

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Tagged: Alternative Dispute Resolution (ADR), Contract Law, Human Rights, Regulators, Sport Law, Trade

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