November 30, 2018
This guest post was written by Cathérine Van de Graaf, a PhD student at Ghent University.
In Mutu and Pechstein v. Switzerland, the European Court of Human Rights considered the lawfulness of proceedings at the Court of Arbitration for Sports (CAS) in Lausanne. In its analysis, the Court focussed on three elements: the free acceptance of the arbitration clause by the applicants; the status of the CAS as an independent and impartial tribunal established by law and the absence of a public hearing.
The facts and national proceedings
The first applicant in the case is Adrian Mutu, a professional football player from Romania. After a 26 million euros transfer from AC Parma to Chelsea in 2003, the English Football Association found traces of cocaine in the applicant’s blood sample. Consequently, Chelsea terminated their contract with the applicant with immediate effect. The Football Association Premier League Appeals Committee (FAPLAC) affirmed that there had been a unilateral breach “without reasonable cause” on the part of the applicant. On appeal, the CAS upheld this decision. Additionally, Chelsea initiated proceedings for compensation at the Disputes Division of the International Federation of Association Football (FIFA) that resulted in an order for the applicant to pay over 17 million euros to his former club. When the CAS dismissed the applicant’s appeal against this order, the applicant submitted an appeal with the Swiss Federal Supreme Court seeking to have the decision of the CAS set aside, arguing that the procedure lacked independence and impartiality. In his claims, the applicant referred to an arbiter that worked as a partner in a law firm “that represented the owner of the Club Chelsea”(par. 16) as well as, an arbiter that sat on the bench during the appeal procedure on the unilateral breach. The Swiss Supreme Court was not convinced by these claims and found that the CAS could be considered “independent and impartial”.
The second applicant in the case, Claudia Pechstein, was a five-time Olympic champion when suspended by the International Skating Union (ISU) for a two-year period after undergoing anti-doping tests at the world championships in 2009. Joined by the German speed skating association, the applicant appealed this decision at the CAS. Despite her request for a public hearing, it was held in chambers. After the CAS had confirmed the two-year suspension, Ms Pechstein applied to the Swiss Federal Supreme Court stating that the method of appointing arbitrators to the CAS did not guarantee impartiality and independence. In addition, she complained that no public hearing was held. The Supreme Court rejected this appeal.
An arbitration clause as a waiver of rights
First, the Court confirmed that Article 6 does “not preclude the establishment of arbitral tribunals to try certain disputes of a patrimonial nature between individuals” (par. 94. Author’s translation) and, as such, arbitration clauses do not contradict the Convention. Yet, as such a clause necessarily includes a waiver of certain Convention rights, it is only accepted when the waiver is “free, lawful and unequivocal” (par. 96. Author’s translation). To assess this requirement, the Court compared the particular situation of the applicants to prior case law. In the decisions Tabbane v. Switzerland, Eiffage S.A. and Others v. Switzerland and Transado-Transportes Fluviais do Sado, S.A. v. Portugal, it was found that the applicants had been free to establish commercial relations with the chosen partner without any effect on their freedom to carry out other projects. Whereas, for the second applicant, the Court found that: “the only choice available to the applicant was either to accept the arbitration clause and be able to earn a living by practising her discipline at a professional level, or not to accept it and have to give up her income entirely by practising her discipline at this level.” (par. 113. Author’s translation). As such, the Court concluded that this constituted forced arbitration.
The first applicant, on the other hand, did not show that accepting the arbitration clause was the only choice available to him. The Court bases this decision on two elements. Firstly, they argue that the FIFA arbitration clause did not preclude an appeal before a civil court. Secondly, when the applicant complains about an imbalance in negotiation powers due to financial means, the Court states that it can accept this. It further specifies that the applicant did not provide evidence that would show that other players at Chelsea had to accept the clause in their contract and neither that other football clubs – “with more modest financial means” – would not have hired him. Thus, he had freely accepted the arbitration clause. Nevertheless, with the request to disqualify a certain arbitrator, the applicant cannot be considered to have “”unequivocally” waived the challenge of the independence and impartiality of the CAS during a possible dispute with the Chelsea club.
Consequently, for both applicants, the arbitration procedure has to offer the guarantees from Article 6, § 1 of the Convention.
The CAS as “an independent and impartial tribunal established by law”
Regarding the “tribunal established by law” requirement, the Court found that although the CAS was “the emanation of a foundation under private law (…) it enjoyed full jurisdiction to find out about the basis of norms of law and following an organized procedure, any question of fact and of law which was submitted in the context of the disputes before it” (par. 149. Author’s translation). Additionally, they refer to the consistent case law of the Swiss Supreme Court in which the CAS’s judgments are accepted as “real judgments, similar to those of a state court” (par. 149. Author’s translation).
When assessing the independence and impartiality of the CAS in accordance with Article 6, § 1, the Court did not find a violation for either applicant. The Court held that the claims of the second applicant against the president of the arbitral panel had to be rejected because of their vague and hypothetical nature. With regard to the manner of funding for the CAS, the Court held that – just as national courts who are funded by a national budget – no lack of independence and impartiality can be inferred from this. The Court did not find that “a structural problem of imbalance between federations and athletes in appointment of arbitrators” was a threat to the independence and impartiality of the CAS. The Court stressed that the list of arbitrators was drawn up by the International Council of Arbitration for Sport (ICAS) and that further, the arbitrators were subject to dismissal by the latter. The list consists for one-fifth of arbitrators from independent sports authorities that could oppose athletes in disputes. However, the Court argued it could not find – “by the mere fact of this influence” – that the existing list was composed of arbitrators that lacked impartiality and independence. Even if the second applicant was limited to the list drawn up by the ICAS to select the arbitrator of her choice, the Court found that it included – at the given time – around 300 arbitrators and the applicant did not provide factual evidence to dispute their independence and impartiality. Nor did she “contest in concreto any single arbitrator” (par. 157. Author’s translation). In conclusion, the Court did not find sufficient reasons to depart from the consistent jurisprudence of the Swiss Supreme Court. In this jurisprudence, the list of arbitrators was accepted as providing sufficient guarantees for independence and impartiality to arbitral tribunals functioning as external appeal bodies to international federations.
On the complaint of the first applicant that the arbitrator already sat in the previous formation of the CAS, the Court stated that this could raise a legitimate fear for bias. The Court emphasized that for bias to exist the arbitrator would firstly have had to examine identical facts and secondly respond to the same question. As the first question had concerned contractual liability and the second one the amount of damages, the Court found the second requirement was not fulfilled. With regard to the criticism on the arbitrator and his link with a law firm that represented the owner of the football club, the Court did not want to substitute its own views on those of the Supreme Court, which had decided – in a duly reasoned judgment – that the applicant did not prove these allegations. In conclusion, the Court did not find a violation Article 6, §1 when assessing the claims about a lack of independence and impartiality of the CAS.
The absence of a public hearing
The Court concluded the judgment by investigating Ms Pechstein’s complaint about the absence of a public hearing. Since it is a case of forced arbitration, the requirements of Article 6, §1 need to be fulfilled when refusing the requested public hearing. As the proceedings aimed to verify whether the applicant had been correctly sanctioned – for which numerous experts were heard –, the Court found that a hearing subject to public scrutiny was required and thus, the refusal violated Article 6, §1.
Partly dissenting opinion by Judges Keller and Serghides
Two out of the seven judges disagreed on substantive aspects of the judgment: that the CAS does not fulfil the requirements of independence and impartiality, that it does not constitute a court established by law and that Mr Mutu’s “free” waiver could not be used to his detriment.
Firstly, the dissenters disagree with the required proof of influence by the majority in the case of the second applicant, as this appears to include evidence for each arbitrator. They argue that this exceeds what is normally required in cases of objective impartiality and independence. Further, they state that it does not suffice – under Article 6, § 1 – for arbitrators to be impartial and independent in their individual capacity. Rather, well-established case law includes general requirements for impartiality and independence such as “the method of appointment and the term of office of the members (…), the existence of guarantees against external pressure (…) and whether or not there is an appearance of independence”(par. 13. Author’s translation).
Secondly, the two judges expressed doubts as to the application of the “established by law” test. They find that the majority should have given some additional guidance as to how private entities may fulfil these requirements. The dissenters found that – in previous cases of voluntary arbitration – this question did not arise because the right to a court established by law had been waived by the applicants.
Thirdly, Judges Keller and Serghides disagree with how the majority uses to the first applicant’s detriment that he had chosen to go to the CAS rather than to an ordinary court. They find a contradiction in how, on the one hand, the waiver was not found to be unequivocal, when, on the other hand, the majority takes his “free waiver” into account when ruling on his complaint about a lack of impartiality. When a procedure does not provide guarantees to impartiality and independence, the nature of the waiver should be more strictly scrutinized by the Court. They argue that it is “inconceivable that an individual waive his right to an impartial and independent tribunal and still be subject to a fair hearing” (par. 27. Author’s translation).
In a previous blogpost on sports at the European Court of Human Rights, the communicated case of Bakker v. Switzerland was briefly discussed. In this case, the applicant, a Dutch professional cyclist, had lodged an application with the Swiss Supreme Court after the CAS confirmed his life-long ban from participating in sports competitions. As this case is still pending, Mutu and Pechstein v. Switzerland appears to be the first case in which the ECtHR rules on the right to fair trial in the context of the Court of Arbitration for Sports. According to the dissenters, it raises important new issues. Hereinafter, the focus will be on the acceptability of the arbitration clause, rather than whether the CAS fulfils the procedural requirements in Article 6 § 1.
Indeed, at the Belgian national level, a recent challenge of forced arbitration clauses occurred in RFC Seraing and Doyen Sports Company v. FIFA and Others (a summary of the case can be found here). The case relates to the question of parties’ consent to arbitration proceedings. In its judgment, the Brussels Court of Appeal found that the forced and general obligation to refer all football incidents to the CAS was unlawful. According to the CAS, the Brussels Court did not reject their jurisdiction but rather found a problem in the wording of the arbitration clause in the FIFA statutes. However, references to the power imbalance in the acceptance of arbitration clauses could suggest a more critical stance on the monopoly of the CAS.
The arbitration clauses many athletes are subjected to are on a ‘take it or leave it’ basis. Rather than obtaining their free consent, Sports Governing Bodies provide athletes with no choice but to accept. These recent cases show that there is a need for a pause for thought. The ECtHR explicitly refers to this predicament in the Mutu and Pechstein judgment. In the case of the first applicant, the Court accepts that the bargaining power of a football club such as Chelsea may exceed that of an individual player. Nevertheless, it finds the applicant’s claim to be lacking evidence that other professional football clubs would have refused to hire him without a waiver to ordinary jurisdiction. As such, the first applicant’s situation differs from that of the second applicant as the Court could not find that the applicant had no other choice but to accept. In this regard, the Court refers to the opportunities for the first applicant in clubs with more limited financial means.
The Court finds that the second applicant could only “earn a living by practicing her discipline at the professional level” when she accepted the arbitration clause. In stating this, the European Court departs from its established case-law on arbitration clauses in commercial arbitration. Instead, it argues that there is no “free, lawful and unequivocal” waiver of the rights in the European Convention on Human Rights, as the consequences of non-acceptance on Pechstein’s professional life would have been major. The Court appears to make a distinction between the freedom to earn a living from sports and the freedom to earn the highest possible salary in the discipline.
 The fact that the FIFA arbitration clause also included recourse before a civil court is certainly also very important in this regard.