Source: https://www.lawinsport.com/topics/articles/competition-law/item/the-legality-of-the-arbitration-agreements-in-favour-of-cas-pechstein-part-2?category_id=125
Timestamp: 2019-04-21 04:45:42+00:00

Document:
Part one provides a background to the case and reviewed the BHG Ruling focusing on the finality of arbitral awards, the qualification of CAS as a genuine court of arbitration and the scope of the arbitration agreement between the Athlete and the International Skating Union (ISU).
Part two provides a reviews the BHG Ruling's findings in regards to the compatibility of the arbitration agreement with German anti-trust laws by examining, in particular, the athlete’s right to a fair trial; the constitutional rights of the athlete and the federation; the status of the Swiss Federal Tribunal and the issue of human rights in sports arbitration; the compatibility of sports arbitration clauses with European competition law; and finally the conformity of CAS sports arbitration clauses with Swiss Law.
All views expressed in this article are her own personal views.
her right to a fair trial under Art. 6 ECHR (under (cc)).
Finally, the BGH did not miss the opportunity to reiterate the traditionally favourable view of arbitration proceedings under German law29 but also the adoption of a federal law to fight doping in sport (Gesetz zur Bekämpfung von Doping im Sport), which equally foresees recourse to arbitration for doping-related cases.
As a fourth (under dd)) criterion in order to substantiate its finding that ISU did not abuse its dominant position, the BGH examined – and subsequently excluded – the violation of Art. 102 TFEU, which is a provision almost identical to Art. 19 GWB (the national equivalent to Art. 102 TFEU) and finds parallel application in Germany.34 Like under Art. 19 GWB, Art. 102 TFEU only prohibits the abuse of a dominant position.35 Abuse of a dominant position may be either exploitative (directly harming consumers) or exclusionary (that could exclude the market to competitors). It should be noted that the OLG München decision (which only examined the compatibility of the arbitration clause with Art. 19 GWB and not with Art. 102 TFEU) was criticized in its considerations on competition law.36 The OLG decision had failed to scrutinize whether the anti-doping rules could be justified on the basis of their legitimate objective, without taking into account the actual effect of the rules.
The BGH clearly distinguished between labour law disputes and sports-related (doping-specific) disputes, indirectly recognizing the peculiarities of sports-related disputes among athletes and federations. This is an important finding, as the limitations existing in labour law arbitration cannot find analogous application in the sports sector. The BGH justified this by the common – or rather non-conflicting – interests of both athletes and sports federations in the swift resolution of disputes and in the fight against doping.
The BGH found that the fact that the athlete did not wish to sign what constitutes a “contractual agreement” does not meet the high legal standard of a “forced” waiver of the party’s constitutional rights as established in the jurisprudence of the BGH. However, the BGH acknowledged that the signature of the arbitration agreement was “fremdbestimmt” (defined by a party having monopoly in the organization of world championships) and therefore proceeded to balancing the relevant interests according to the general provisions of civil law and the basic constitutional rights of the Athlete.
Moreover, while the OLG München found that there was no rational justification for the structural imbalance in favour of the sports associations nor were there shared interests between athletes and sports associations,42 the BGH concluded exactly the opposite. Despite the peculiarities of the CAS arbitrators’ appointment process, no structural imbalance can be identified that puts into question the independence and impartiality of the institution.
Overall, the BGH rendered a landmark decision in the Pechstein case, confirming the favourable view of German state courts vis-à-vis arbitration proceedings in general and the sports-related arbitration system in particular. The decision also constitutes a confirmation that CAS, even with its imperfections, can be a reliable alternative dispute resolution mechanism as the last instance for doping-related disputes. Crucially, the BGH found that the OLG München had gone too far in its control of the arbitration agreement and most particularly the control of “independence” and “neutrality” according to the German Code on Civil Procedure and the jurisprudence of the BGH for the recognition and enforcement of arbitral awards under the NYC58, thereby pre-empting any future light-hearted attacks to the existing sports dispute resolution system but also to arbitration proceedings, more generally.
Indeed, as highlighted above, one of the milestones of international arbitration is the finality of the arbitral awards and their recognition and enforcement by the foreign courts that have ratified the NYC 58, without entering into the merits of the case. As some scholars said after the OLG München Ruling, the Pechstein case could have had important systemic repercussions for arbitration in general, as it could jeopardise the legal certainty that arbitral awards made in Switzerland offer, suggesting that arbitral awards can be reviewed by foreign courts without limits.43 The BGH seems to be mindful of these systemic ramifications. All in all, it is submitted that avoiding to open the Pandora’s box of endless challenges against arbitration awards is, on balance, a correct decision.
At the same time, the BGH ruling must be placed in its context, i.e. it concerns the recognition of validity of an arbitration clause that resulted in a foreign arbitral award (rendered by an arbitral institution) in a sports-related, anti-doping dispute between an athlete and a sports federation. Also, the control made by the BGH on the institutional structure of CAS was based on a situation that existed back in 2009 (the 2004 version of the CAS Code was applicable back then).44 The role of the BGH was to control all elements of the case under German civil and competition law (but also under Swiss law) and proceed to a judgment on the specific case at hand. Strictly speaking, the decision could only have a precedential value to the extent that the 2004 version of the CAS code would apply.
Finally, a question that legitimately arises is whether the BGH would reach a similar decision in non-doping cases. From the argumentation in the first part of the decision (according to which the CAS is a genuine court of arbitration under the applicable German laws but also the arguments as to the advantages of sports arbitration and the autonomy of associations), one can reasonably speculate that the BGH ruling would not be much different.
See BGH Ruling, at 44.
OLG München Ruling, at 88. The OLG München had also acknowledged that there are legitimate grounds to favour arbitration, such as uniform competence and procedure, equal opportunities of athletes during the competitions etc.
For a presentation of the German competition law see also Fabian Stancke, Pechstein und der aktuelle Stand des Sportkartellrechts, SpuRt 2015, pp. 46-51.
See Tarkan Göksu, Das “Pechstein-Urteil” des Landgerichts München: Falsche Anwendung schweizerischen Rechts, Causa Sport 2014, p. 360; See Antonio Rigozzi / Fabrice Robert-Tissot, “Consent” in Sports Arbitration: Its Multiple Aspects, Lessons from the Cañas decision, in particular with regard to provisional measures, in: Geisinger/Trabaldo-de Mestral (Eds), Sports Arbitration: A Coach for Other Players?, New York 2015, pp. 64 ff., p. 68 & 72; see Christian Duve / Karl Oemer Rösch, Der Fall Pechstein: Kein Startschuss für eine Neugestaltung der Sportschiedsgerichtsbarkeit, SchiedsVZ 2014, p. 223.
By doing so, the BGH Ruling employed a very wide test of consent, in direct opposition to the OLG München Ruling. On the approach of the OLG München Ruling, see Xavier Favre-Bulle, Pechstein v. Court of Arbitration for Sport: How Can We Break the Ice? in Müller / Besson / Rigozzi (eds), New Developments in International Commercial Arbitration, 2015, Publications of the CEMAJ Research Center on Alternative and Judicial Dispute Resolution Methods, Geneva / Zurich 2015, Schulthess, p. 328 f. [cited: Xavier Favre-Bulle: Pechstein v. Court of Arbitration for Sport], p. 333.
See Antoine Duval, The BGH’s Pechstein Decision: A surrealist Ruling, 8 June 2016, available at: https://www.asser.nl/SportsLaw/Blog/; see also Der Bundesgerichtshof geht in der Anerkennung von Schiedsvereinbarungen sehr weit, 9 June 2016, available at https://www.schweizer.eu/. See Rebecca Ruiz, Sports Arbitration Court Ruling Against German Speedskater Claudia Pechstein is Uhpeld, 7 June 2016, available at: https://www.nytimes.com/2016/06/08/sports/sports-arbitration-court-ruling-against-german-speedskater-claudia-pechstein-is-upheld.html?_r=0.
On the very interesting debate among Swiss scholars and practitioners around what constitutes consent in sports arbitration, see in particular Antonio Rigozzi / Fabrice Robert-Tissot, 2015 (fn.8), p. 64 f. The authors support the validity of the arbitration agreement notwithstanding the lack of true consent by the athletes. See also Margareta Baddeley, Droits de la personnalité et arbitrage: dilemme des sanctions sportives, in: Gauch/Werro/Pichonnaz (eds.), Mélanges en l’honneur de Pierre Tercier, Geneva/Zurich/Basel 2008, p. 717 ff. For a pragmatic presentation of the situation in sports arbitration see Xavier Favre-Bulle: Pechstein v. Court of Arbitration for Sport (fn.10), p. 332.
UNESCO International Convention against Doping in Sport of 19 October 2005.
OLG München Ruling, at 85. The Court had found that Art. 4§1 of the Convention merely referred to the principles of the WADC and that this provision did not clearly oblige parties to provide for the exclusive jurisdiction of CAS, notwithstanding the fact that Art. 13.2.1 WADC provided for an exclusive appeal against ADR decisions to the CAS and the compliance mandate of Art. 23.2.2. It must be noted that this was an answer to ISU’s argument that the GWB rules are precluded because the arbitration clause was mandated by the UNESCO Convention Against Doping in Sport of 2005 (OLG München Ruling, at 84).
Idem for the IOC, which under Art. 30.1.2 WADC conditions the recognition of international sports federations on their compliance with the WADC, see BGH Ruling, at 60.
The BGH therefore repeated, in other words, the “shared interests” argument of sports arbitration put forward in the determination of the CAS as a “genuine court of arbitration” – see above: CAS is a “genuine court of arbitration” under German law. See BGH Ruling at 62.
See the similar arguments raised also under the first part of the decision, when the BGH dealt with the qualification of CAS as a genuine CAS is a “genuine court of arbitration” under German law.
Art. R34 of the CAS Rules.
The control of arbitral tribunals by the supreme court of the seat of arbitration is a possibility that is also foreseen in many other countries, like in Germany under Art. 1059 ZPO, see BGH Ruling at 62.
See ATF 4P.172/2006, judgment of the SFT of March 22, 2007.
See the criticisms of Antoine Duval on the SFT (who called the SFT “a paper tiger”) in the blog https://verfassungsblog.de/the-pechstein-case-transnational-constitutionalism-in-inaction-at-the-bundesgerichtshof/ of 10 June 2016.
See inter alia ATF 4A_400/2008, judgment of February 9, 2009; ATF 4A_456/2009, judgment of May 3, 2010; ATF 4A_600/2010, judgment of March 17, 2011; ATF 4A_558/2011, judgment of March 27, 2012; ATF 4A_627/2011, judgment of March 8, 2012. See also Despina Mavromati, Jurisprudence of the Swiss Federal Tribunal in Appeals against CAS Awards, in: Michele Bernasconi (ed.) Arbitrating Disputes in a Modern Sports World – 5th Conference CAS & SAV/FSA Lausanne 2014.
In particular, Art. 1025 ZPO was modified in 1997 in order to further promote and facilitate the use of arbitration as a dispute resolution method, see BGH Ruling at 63.
i.e. after establishing that both parties shared the common interest in having an independent international arbitral tribunal in order to ensure uniform application of the anti-doping rules and fair competition (aa) and that the basic constitutional rights of the athletes were not violated from the signing of the arbitration agreement (bb).
ECHR, judgment of March 5, 1962 – 1197/61, X v. Bundesrepublik Deutschland: see BGH Ruling at 65.
See Pechstein v. Switzerland, No. 67474/10. Ms Pechstein filed a complaint of unfairness of proceedings before the CAS, and of a lack of impartiality and independence of the CAS and its arbitrators. The ECHR gave notice of the application to the Swiss Government and raised questions under Art. 6 par. 1 of the ECHR. See the factsheet of the ECHR available at https://www.echr.coe.int/Documents/FS_Sport_ENG.pdf.
See more in Ulrich Haas, Zwangsschiedsgerichtsbarkeit im Sport und EMRK, ASA Bull 2014, p. 707-734.
Settled ECJ case-law portrays this concept as ‘a position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by giving it the power to behave to an appreciable extent independently of its competitors, customers and ultimately of its consumers’. See Case 27/76, United Brands v. Commission,  ECR 207, para. 65. See more on Art. 102 TFEU in A. Duval / Ben Van Rompuy, The compatibility of forced CAS arbitration with EU competition law: Pechstein reloaded, p. 11-12. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2621983. Importantly, in MOTOE (C-49/07, ECJ judgment of July 1, 2008), the Court clarified that an undertaking can, inter alia, acquire a dominant position when it is granted special or exclusive rights enabling it to determine whether and under what conditions other undertakings can have access to the relevant market and supply their services. It further found that Articles 102 and 106 TFEU are violated when the fact that such rights within the meaning of Article 106 par. 1 TFEU are granted is liable to create a risk of an abuse of a dominant position. The OLG München Ruling shortly referred to the MOTOE judgment as an argument that competition law also applies to the sports sector.
ECJ Case 85/76, Hoffmann-La Roche v Commission (1979), ECR 61, para 91.
See Nathalie Voser, The most recent decision in the Pechstein Saga: red flag for sports arbitration? https://kluwerarbitrationblog.com/2015/01/22/the-most-recent-decision-in-the-pechstein-saga-red-flag-for-sports-arbitration/, Kluwer Arbitration Blog, January 22, 2015. See also Christian Duve / Karl Oemer Rösch, Ist das deutsche Kartellrecht mehr wert als alle Olympiasiege?, SchiedsVZ 2015, p. 71. Anti-doping rules have generally been seen as justified by a legitimate objective, i.e. they are inherent in the organization of competitive sport, see the D. Meca-Medina / I. Majcen v. Commission, ECJ Decision C-519/04 P, 18 July 2006. See also the Wouters ruling of the ECJ, case C-309/99 of February 19, 2002. See also Panagiotis Delimatsis, ‘”Thou shall not…(dis)trust”: Codes of conduct and harmonization of professional standards in the EU’, 47(4) Common Market Law Review, 2010, p. 1083 f.
In addition to the provisions of German anti-trust law that had to be applied in this case, the validity of the arbitration agreement had to be examined according to Swiss law. See BGH Ruling, at 70.
According to the principle of “characteristic performance”.
See the Cañas judgement, ATF 4P.172/2006, judgment of the STF of March 22, 2007, at 4.3.3.2.
The focus on specific details of the enforcement mechanism in the OLG München ruling was criticized as “striking” and “unclear” from a general competition law point of view. See Nathalie Voser, Kluwer Arbitration Blog 2015, (fn.36).
In particular, under EU competition law, legal proceedings are generally only considered to be an abuse of a dominant position in very limited circumstances, see ECJ, case T-111/96, ITT Promedia. See Nathalie Voser, Kluwer Arbitration Blog 2015, (fn.36).
OLG München Ruling, at 109-110.
By reviewing de novo the merits of an already final and binding arbitral award, a foreign court could indeed endanger the basic principles of international arbitration. One of the principal objectives of the Lugano Convention was that a European court seized as second court should recognize and enforce a decision (without reviewing the merits of the previous decision, under Art. 36, or even the jurisdiction of the previous court under Art. 35): see Christian Duve / Karl Oemer Rösch, (fn.36) pp. 69-77. See also Xavier Favre-Bulle: Pechstein v. Court of Arbitration for Sport (fn. 10), p. 330.
Indeed, the ICAS proceeded to a number of procedural reforms, modifying also some provisions as to the constitution of the ICAS and abolishing the quotas for the list of arbitrators which were scrutinized in the OLG München and the BGH Ruling.
The ICAS now is actively encourages the appointment of elite athletes / former elite athletes with legal background for its CAS list of arbitrators. For those without necessary arbitration experience, the CAS will organize a series of educational seminars and preparation training courses in the following months.
Full list of the CAS arbitrators (with their resumes) available at www.tas-cas.org.
We should also note that, from the 20 members of ICAS, there is now equal representation of men and women (10/10). Furthermore, seven out of the twenty members have no links to sports federations and five are Olympians / former elite athletes (M. Lenard, M. Dodd, T. Smith, C. Schmidhauser, D. Pound). In its current composition (2016), the ICAS counts seven attorneys, one university professor, five judges, two government representatives and five sports officials.
See the statistics on the legal aid fund of CAS in Despina Mavromati / Matthieu Reeb, The Code of the Court of Arbitration for Sport, Commentary, Cases and Materials, Alphen aan den Rijn 2015, p. 105.
Various scholars and arbitration practitioners have proposed, from time to time, minor or major institutional reforms within CAS. See, inter alia, Charles Poncet, The independence of the Court of Arbitration for Sport, European International Arbitration Review, 2012/1, p. 31 ff.; See also Antonio Rigozzi / Fabrice Robert-Tissot, 2015 (fn. 43), p. 71.

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