At the end of December 2015, the CAS decided on a very public contractual dispute between Sporting Clube de Portugal Futebol SAD (Sporting) and Doyen Sports Investments Limited (Doyen). The club was claiming that Doyen’s Economic Rights Participation Agreement (ERPA) was invalid and refused to pay Doyen’s due share on the transfer of Marcos Rojo to Manchester United. The dispute made a lot of noise (see the excellent coverage by Tariq Panja from Bloomberg here, here and here) as it was the first TPO case heard by the CAS after FIFA’s ban. Yet, and it has to be clear from the outset, the case does not affect the legality of FIFA’s TPO ban; it concerned only the compatibility of Doyen’s ERPA with Swiss civil law. The hearing took place in June 2015, but the case was put under a new light by the football leaks revelations unveiled at the end of 2015 (see our blog from December 2015). Despite these revelations, the CAS award favoured Doyen, and was luckily for us quickly made available on the old football leaks website. This blog will provide a commentary of the CAS decision. It will be followed in the coming days by a commentary by Shervine Nafissi on the judgment, on appeal, by the Swiss Federal Tribunal.

I. The facts

During the summer of 2012, Sporting Clube de Portugal Futebol SAD (‘Sporting’) signed two professional football players: (i) Zakaria Labyad, a Dutch-Moroccan international from PSV Eindhoven for a transfer fee of €900,000; and (ii) Faustino Marcos Alberto Rojo (Marcos Rojo), an Argentinean international from Spartak Moscow for a transfer fee of €4 million.

Against this background, negotiations took place between Sporting and Doyen Sports Investments Limited (‘Doyen’), a private investment company known for its engagement in the acquisition of professional football players' economic rights. On 23 August 2012, Sporting and Doyen concluded a series of agreements which were aimed at providing a financial aid to Sporting in exchange for the acquisition of a proportionate share of Labyad's and Rojo's economic rights.

According to the Economic Rights Participation Agreement related to Labyad (‘ERPA 1’), Sporting accepted to transfer 35 % of Labyad's economic rights to Doyen against the payment of €1.5 million. The other Economic Rights Participation Agreement related to Rojo (‘ERPA 2’) obliged Sporting to transfer 75 % of Rojo's economic rights to Doyen for the price of €3 million. These agreements also provided Doyen with the unilateral so-called 'Put Option' to sell back to Sporting for a predetermined price its share of the players' economic rights in case Sporting should not have transferred the players on or before 1 July 2015.

On 28 March 2013, Sporting appointed a new Board of Directors. In order to ameliorate the club's financial situation, Sporting subsequently decided to put Rojo on a transfer list. At the same time, Sporting requested Doyen to find a solution for. Rojo. One of the main representatives of Doyen allegedly agreed on the transfer of Rojo to Calcio Catania, a then top-tier Italian club. Nonetheless, shortly thereafter, Sporting indicated that its new-appointed coach had decided to keep Rojo and asked Doyen to revoke the deal.

In the meantime, an agreement was signed between Sporting, the Dutch club SBV Vitesse Arnhem (‘Vitesse’) and Labyad, whereby the latter was loaned to Vitesse from 8 January 2014 until 30 July 2015. The loan was made without compensation. It was agreed that during the loan period that Vitesse would pay for the player's wages and secure the necessary insurance policies. This contract did not contain any purchase option.

Following his unexpectedly great performances in the Argentinean national shirt during the 2014 FIFA World Cup in Brazil, Rojo attracted many prominent clubs in Europe. Initially, Rojo was not willing to leave Sporting, but he switched this position in August 2014.

After a round of unsuccessful negotiations with Southampton F.C., Manchester United F.C. placed its offer for Mr. Rojo's services amounting €20 million. Eventually, on 19 August 2014, Sporting contractually agreed to transfer Mr. Rojo to Manchester for the sum of €20 million net, plus 20% of the capital gain of any future transfer above the amount of €23 million. On the same day, Manchester also accepted to transfer the Portuguese international Nani to Sporting on a temporary loan basis for one year.

By that time, relations between Sporting and Doyen deteriorated, particularly due their opposing views with respect to the applicability of the ERPAs to the case at hand. As a result thereof, Sporting notified Doyen of its intention to terminate both ERPAs. In its response, Doyen objected to the termination of these agreements and attached to its communication an invoice of €15 million to be paid in two instalments. On 28 August 2014, Sporting reimbursed to Doyen the value of its investment made under the ERPAs (i.e. the amount of €4.5 million).

On 16 October 2014, Sporting filed with the CAS a combined request for arbitration and statement of claim against Doyen in accordance with Article R38 et seq. of the Code of Sports-related Arbitration. On 21 October 2014, Doyen filed its request for arbitration against Sporting. Later that month, the parties agreed to consolidation of the both procedures. The hearing before the CAS was held on 16, 17 and 18 June 2015. Finally, on 21 December 2015, the CAS rendered its arbitral award.

II. The reasoning of the CAS

The CAS award is structured around Sporting’s various claims against the validity of the ERPA, as well as its contention of lawfulness of its breach. To do so, the CAS examined closely the compatibility of the ERPA with Swiss Law and EU Law.

1. Is the ERPA legal?

In a preamble, the CAS reminds that the “principle of party autonomy is the backbone of Swiss contract law”.[1] However, “Articles 19 and 20 CO [Swiss Code of obligations], prohibit contracts which are impossible, unlawful, immoral and/or contravene public policy or personality rights.”[2] In particular, the Sporting claimed that the performance of the contract is unlawful and immoral.

• Is the performance of the ERPAs unlawful under Swiss law?

As pointed out by the Panel, under Swiss contract law, an unlawful contract is null and void. According to the Swiss Federal Tribunal, “contract is unlawful when its content violates Swiss law (federal and/or cantonal)”.[3] The question was consequently whether Sporting could demonstrate such a violation. In this regard, the club argued first that the ERPAs contradicted Swiss labour law. The Panel, however, quickly rejected this argument, as the players were not parties to the ERPAs. The second, and more serious, potential violation of Swiss law pointed out by Sporting concerned Article 157 CPS (Swiss Penal Code).[4] The provision condemns profiteering and overlaps with article 21 CO (Swiss Code of Obligations) respective to unfair advantage.[5] Any claim stemming from article 21 CO must be raised within the first year after the conclusion of the contract, thus Sporting was time-barred. Regarding Article 157 CPS, the panel considered it “cannot be deemed violated in this case, since the acts invoked as being criminal by Sporting all fall outside the territorial scope of application of the CPS, bearing in mind that the contracts were signed outside Switzerland by non-Swiss individual/entities without any of the Parties’ acts or their effects occurring in Switzerland”.[6] Such reasoning would basically immunize from nullity any contract signed and enforced exclusively outside of Switzerland, even if found contrary to Swiss criminal law. In any case, the Panel went on to assess substantively whether the ERP violates Article 157 CPS. Following the jurisprudence of the SFT, profiteering is constituted “when business good practice requirements are grossly violated and the limits of what seems normal and usual in light of all the circumstances, are significantly exceeded (ATF 92 IV 132, consid.1)”.[7] Moreover, “the offender must know that the other party is in a weak position and must be aware of the fact that a) there is a disparity between the respective considerations and b) the victim accepts this unbalanced deal because of its weakened state (ATF 130 IV 106 consid.7.2)”.[8] Based on the following elements:

• Sporting was not inexperienced in sharing its players’ economic rights with investment funds.
• Sporting entered into contact with Doyen and asked for its financial assistance.
• Sporting needed Doyen’s support to finance the transfer of two players; one of them (Rojo) was also the “target” of another club, SL Benfica.
• The ERPAs were negotiated for a month, each party being assisted by lawyers and experts.
• The signatories confirmed that they freely chose to sign the ERPAs.
• Sporting’s new management was aware of the scope of the ERPAs but never contested their validity before August 2014.
• There is no evidence that the signature of the ERPAs has deteriorated Sporting’s financial situation.[9]
  

The Panel, hence, found “that at the moment of entering into the ERPAs, Sporting was not in a state of “need, dependence, inexperience, or weakness of mind or character”, which was exploited by Doyen”. [10] Moreover, “Sporting was not forced to sign these players and the acquisition of their services was certainly not a “matter of life and death” for the club”. [11] Henceforth, the CAS arbitrators concluded that “the material conditions for Article 157 CPS to apply are not met”.[12]

The Panel quickly brushed aside the claim that the ERPAs would contradict FIFA regulations as those are not mandatory provisions of Swiss law in the sense of Article 20 CO.

• Is the performance of the ERPAs immoral under Swiss law?

The second strand of arguments of Swiss law raised by Sporting concerns the immorality of Doyen’s ERPAs. As recalled by the CAS, immoral contracts under Swiss law are those that:

• fall under a dominant moral disapproval; or
• contravene the general sense of what is right and what is wrong; or
• go against the ethical principles and values of the legal system as a whole.

Moreover, on immorality, “Swiss case law is very restrictive and is mainly linked to sex-related cases, unfair competition and bribery”.[13] Thus, the fact “that there is a big disparity between the respective considerations is not in itself immoral”, as “the Swiss legal order do not forbid a difference in value between the contractually agreed performance”. [14] Thus, the CAS set out a very challenging legal framework for Sporting to demonstrate the immorality of the ERPAs.

The CAS Panel considered that a “global evaluation of the two ERPAs shows that both the club and Doyen entered into a standard business oriented deal, where the amount of the loan granted was not necessarily in relation with the percentage of the assigned economic rights”.[15] It also held that “[s]uch a profit sharing is quite usual in the football industry, where the transferee clubs often undertake to share a percentage of the future transfer with the player’s former club”. [16] Thus, it “finds that the object of the ERPAs is not legally immoral”.[17]

In the proceedings before the CAS, Sporting had insisted on the huge return on investment earned by Doyen on the Rojo ERPA, to highlight the discrepancy between the two sides of the contract. But the CAS Panel recalled “that the fact that there might be a disparity between the respective considerations is not immoral”.[18] Moreover, it pointed out that “a discrepancy in possible profits (one party making more profit than the other) is quite different from the scenario where only one party stands to gain and the other to lose”. [19] Hence, it concluded “that there was no “economical unbalance” as defined by Swiss law between Doyen and Sporting’s respective considerations”. [20] Furthermore, as Sporting was in financial difficulties at the time of the conclusion of the ERPAs, the CAS Panel “disagrees with Sporting when it claims that Doyen’s investment was risk free”.[21] It did insist that even if the “Put Option” and the “Minimum Interest Fee” were considered immoral, they would not come in play in the present case as they were not triggered.

Finally, the Panel assessed Sporting’s claim that the ERPAs would constitute an excessive restriction of Sporting’s economic freedom under Article 27(2) CC (Swiss Civil Code).[22] The CAS arbitrators refer to the SFT’s view that “a contractual limitation of economic freedom is disproportionate within the meaning of Article 27 para. 2 CC only when the obligee submits to someone else’s arbitrariness, gives up his economic freedom or restricts it in such a way that the foundation of his economic existence is jeopardized”.[23] In this regard the Panel concluded that “among all the creditors of Sporting (representing a consolidated debt of €500 million), Doyen was certainly not in a position to prevent Sporting from continuing its economic and other activities”.[24] Indeed, would Sporting “have failed to meet its commitments, it would not have been subjected for that reason alone to Doyen’s arbitrariness or threatened in its economic freedom in such a serious manner that the foundations of its economic existence would be jeopardized”.[25] Furthermore, responding to Sporting’s claim that its freedom to act was drastically curtailed by the ERPAs, the Panel held that the facts of the case demonstrate “that on important occasions, Sporting was free to act as it wished”.[26] In short, Sporting failed to demonstrate with concrete evidence that Doyen’s ERPAs were used to forced the club to take key economic decisions.

• Are the ERPAs contrary to EU law?

The claims of Sporting against the ERPAs based on EU law or the ECHR failed due to the lack of evidence presented by the club to support them. The incompatibility of an ERPA with EU competition law seems very difficult to demonstrate in the abstract. It is true that UEFA and FIFPro have submitted a joint competition law complaint to the European Commission against TPO contracts. Yet, it remains difficult to envisage the specific competitive restrictions or abuses of dominant position that could be argued against Doyen’s ERPAs. Additionally, regarding the potential infringement of the free movement rights of the player, the Panel rejected Sporting’s right to raise the argument in the name of the players.[27] In any case, this is a tricky argument for a club to make, because if ERPAs have the potential to affect the players’ freedom to work, it is only through the club’s willingness to punish the player for not accepting a transfer requested by a third party.

In conclusion, the CAS deemed Doyen’s ERPAs compatible with Swiss and EU law

2. Has Sporting unlawfully terminated the ERPA?

The next question was whether Sporting terminated the ERPAs with just cause. In this part of the award, the validity of the ERPAs is not anymore at play. Instead, it is the conformity of Doyen’s actions with the contractual duties stemming from the ERPAs which was scrutinized by the Panel. In this regard, the main argument of Sporting was that Doyen has violated the non-interference duties enshrined in Articles 6.2[28] and 14[29] of Rojo’s ERPA. The assessment of this claim is highly dependent on factual elements brought forward by Sporting and Doyen.

With regard to Article 6.2 of the Rojo ERPA, the Panel found “that Sporting has not established in a convincing manner that it expressly and unequivocally asked Doyen to stop looking for transfer offers for Mr Rojo”. [30] In particular, “the fact that the President and Vice-President of the club admitted that they would “keep the door open” to any sufficiently interesting offer”.[31] Additionally, the Panel held “that given the very long period of time during which Sporting expressly requested and/or implicitly accepted that Doyen seek offers on its behalf, it would have taken particularly clear written instruction for the latter to be led to believe in good faith that it must cease all activity”. [32] Hence, “in the absence of a clear revocation, Doyen was entitled to continue looking for better transfer conditions”.[33] The arbitrators concluded that Doyen had not breached Article 6.2 of the ERPA.

As regards Article 14 of the Rojo ERPA, and whether Doyen exercised pressure on Sporting’s transfer-related policy, the Panel’s holdings are less favourable to Doyen, even though Sporting’s claims are rejected in the end. In light of the evidence presented, the arbitrators refused to consider that Sporting had demonstrated that Doyen exercised undue or unusual pressure to impose the transfer of Rojo. They insisted on a number of circumstances that played in favour of Doyen:

• Doyen was only “relying on a contractual right” when drawing attention to the fact that it would claim the €15 million if Sporting refused to transfer Rojo;
• Doyen was willing to consider ways of improving (compared to the ERPA) the benefit Sporting would get from the transfer;
• Sporting never seemed impressed by Doyen’s messages and refused numerous proposals in the past;
• Doyen’s intervention led to a substantial increase of the transfer fee from €12.5 million to €20 million;
• Doyen tried desperately to get a meeting with Sporting’s President;
• Sporting went on to transfer Rojo to Manchester United by itself.[34]
  

In the award, the Panel did acknowledge that Nelio Lucas was “putting some pressure on Sporting but essentially in an attempt to obtain a meeting with Mr Bruno de Carvalho”.[35] Moreover, the Panel also noted “Doyen and Sporting had been in a business relationship on a long-term basis and were used to discussing openly and regularly”. [36] This part of the award illustrates the structural ambiguity and incoherence of the ERPAs. On the one side, as indicated under Article 6.2 and 14 of the ERPA, Doyen commits to not influencing a club’s policies, while, on the other, through Article 9, 10.4 and 15 of the ERPA, it can undoubtedly strongly influence the transfer policies of a club through economic pressure. The Panel decided to resolve this contradiction in favour of Doyen and refused to consider that it had breached its contractual duties enshrined in Article 14. This led the CAS to conclude that “Sporting cannot, in good faith, claim that it had a just cause to unilaterally terminate its contractual relationship with Doyen”.[37] Henceforth, the club was sanctioned to pay to Doyen a considerable sum of money approximating €12 million.

Conclusion: Is FIFA’s TPO ban at risk?

My first concluding point is related to the legality of TPO under Swiss law. I think by now everybody should be aware of the liberalism of Swiss contract law. To be deemed unlawful and/or immoral a contract has to reach a high bar, which, for the CAS at least, Doyen’s ERPAs do not pass. This is great news for Doyen, because if they did all its ERPAs would have been unlawful under Swiss law. Paradoxically, this liberalism is also why FIFA’s TPO ban, a contractual regulation by a Swiss association, is unlikely to be found contrary to Swiss law either. In any event, the CAS rightly points out the general hypocrisy underlying this dispute, TPO contracts are just a spin off of traditional contractual practices in football, and, indeed, clubs, which are speculating on the transfer market constantly (as Sporting was), are extremely badly placed to challenge the morality of TPO.

This leads me to my second point, and, paradoxically again, to a conclusion that I think reinforces the legitimacy of FIFA’s TPO ban. The rejection of Sporting’s claim that Doyen breached the ERPAs provisions highlights the shadowy nature of a transfer market ripe with conflicts of interests. The CAS Panel might very well conclude that Doyen did not force Sporting into transferring Rojo, but based on the facts of the case and what we know since then (on the dirty business tricks of Doyen revealed by the football leaks see here), it is easy to understand how Doyen can be suspected of influencing and controlling the transfer policies of any club with which it had signed an ERPA. The CAS felt that Sporting was playing a similar double game, and this might be true in practice, but the set-up of the contractual situation is such that it necessarily incentivizes speculation and abuses to the detriment of the stability of the clubs’ squads (which, as a reminder, is the main legitimate rationale recognized by the EU Commission to support the legality of the FIFA transfer system as a whole vis-à-vis EU competition law).

Is this award a blow to the legality of FIFA’s TPO ban? Personally, I doubt it (in this regard I differ slightly from Shervine’s conclusion in his case note on the Swiss Federal Tribunal decision to be published on this blog in the coming days). The award recognizes that under Swiss law this type of contractual practices (as many other controversial ones) is legal, but in turn this does not mean that FIFA (or any other State for that matter) is not legitimate in regulating or banning it. Instead, I believe the case highlights very well the many reasons why a TPO ban might be needed. Sporting’s dire financial fate puts a dim light on the incentives of club management to burden their clubs with huge financial risk for short-term sporting benefits. These risks are enhanced by the easy availability of TPO funding and the possibility to speculate on the players’ transfer value. Moreover, clubs tend to be too popular to fail, and investors are very much in a moral hazard position, knowing that municipalities prefer to bail out their local clubs rather than let them fail (see our blog on the rise and fall of FC Twente as a case in point). Finally, TPO enhances the complexity of the (already complex) contractual networks underlying player transfers. The practice makes it way harder (as highlighted by the CAS’s discussion of the steps leading to Rojo’s transfer) to disentangle the various contractual responsibilities, as well as the potential conflicts of interest that might in the end affect the field of play (through indirect financial pressure exercised on players, agents, managers or executives). This opaque complexity is a threat to the integrity of the game and an open door to financial speculation and abuses (as those highlighted by the recent football leaks).

[1] CAS 2014/O/3781 & 3782, Sporting Clube de Portugal Futebol SAD v. Doyen Sports Investment Limited, Award of 21 December 2015, para. 184.

[2] Ibid., para. 190.

[3] Ibid., para. 195.

[4] Article 157 (1) CPS reads as follows: Any person who for his own or another's financial gain or the promise of such gain, exploits the position of need, the dependence, the weakness of mind or character, the inexperience, or the foolishness of another person to obtain a payment or service which is clearly disproportionate to the consideration given in return, any person who acquires a debt originating from an act of profiteering and sells or enforces the same, is liable to a custodial sentence not exceeding five years or to a monetary penalty.

[5] Article 21 CO reads as follows:

1. Where there is a clear discrepancy between performance and consideration under a contract concluded as a result of one party’s exploitation of the other’s straitened circumstances, inexperience or thoughtlessness, the injured party may declare within one year that he will not honour the contract and demand restitution of any performance already made.

2. The one-year period commences on conclusion of the contract.

[6] CAS 2014/O/3781 & 3782, para. 211.

[7] Ibid., para. 212.

[8] Ibid., para. 213.

[9] Ibid., para. 220.

[10] Ibid., para. 221.

[11] Ibid.

[12] Ibid., para. 222.

[13] Ibid., para. 227.

[14] Ibid.

[15] Ibid., para. 231.

[16] Ibid.

[17] Ibid., para. 232.

[18] Ibid., para. 234.

[19] Ibid., para. 236.

[20] Ibid., para. 237.

[21] Ibid., para. 239.

[22] Ibid., paras. 240-249.

[23] Ibid., para. 242.

[24] Ibid., para. 246.

[25] Ibid.

[26] Ibid., para. 248

[27] Ibid., para. 260.

[28] Article 6.2 of the Rojo ERPA states that: “The FUND [Doyen] shall not share the Transfer Information with third parties other than its own advisers while such information remains out of the public domain, and shall be strictly prohibited from contacting or interfering in any way whatsoever, either directly or indirectly, with any of the parties (other than the Club) which is directly or indirectly involved in the negotiations of the potential Transfer, except with the written permission of the Club.”

[29] Article 14 of the Rojo ERPA states that: “The FUND recognizes that the Club is an independent entity in so far as the Club’s employment and transfer-related matters are concerned and the FUND shall not, either through this Agreement or otherwise, seek to exert influence over these matters or the Club’s policies or the performance of its teams.”

[30] CAS 2014/O/3781 & 3782, para. 279

[31] Ibid.

[32] Ibid., para. 280.

[33] Ibid.

[34] Ibid., para. 287.

[35] Ibid., para. 289.

[36] Ibid., para. 290.

[37] Ibid., para. 296

Introduction

A remarkable aspect of the run-up to the 2016 Rio Olympic Games was the stream of negative media reports portraying broad-scale public mistrust in sport, with the most prominent topic being the doping scandals in athletics and questions surrounding the participation of Russia.  

A different controversy, but one also directed at the credibility of sports, has exposed a few female Olympians to repeated, and at times rather intrusive, media scrutiny. In June 2016, it was reported that Indian track-and-field athlete Dutee Chand had qualified for the Rio Olympic Games by breaking the national record, thus to become the first Indian athlete to run the 100m at the Olympics since 1980. The attention that Dutee Chand’s qualification attracted within international media, however, was not related only to her outstanding results. It came as part of a medical, ethical and legal controversy that has existed for many years relating to ‘policing’ the male versus female divide in sports. Another athlete who has found herself in the midst of this controversy is South African runner Semenya Caster, whose participation in the Olympics has been the object of much conjecture.

The divide between male and female athletes forms the core of most sports’ competition rules, including athletics. The justification for this basic divide has rarely been questioned as such, but has been a matter for debate when it comes to handling atypical situations on both sides of the ‘dividing line’ ­ such as ‘transgender’ or ‘intersex’ athletes. A category of athletes that has, especially, been viewed as a challenge to the divide is composed of female athletes affected by ‘hyperandrogenism’, a health condition that results in naturally elevated androgen levels, including testosterone levels.

On 24 July 2015, a CAS panel rendered a decision involving Dutee Chand (“Dutee Chand” or “the Athlete”) that has fuelled the ongoing debate about the policies regulating hyperandrogenism in sport. Much has been reported in the media about the case: controversial issues include whether the CAS was the appropriate forum to assess these questions; whether the decision was appropriate, both on the merits and on the procedure; and what the consequences of the CAS award would be, for the parties, for athletics and for the sporting community at large.

Much like the current crisis surrounding doping in sports, the public attention on women with (proven or suspected) hyperandrogenism is driven by a concern that an athlete’s physiology – natural or artificially induced ­ could distort competition, destroying the ‘level playing field’ that supports the Olympic ideal. Both topics are also often brought back to the goal of protecting an athlete’s health. Parallels are further found in the strong reactions both topics evoke, and the steps taken by the regulating authorities to convince the public that everything in their power is being done to preserve a level playing field.

A less obvious but equally important point of comparison can be found in the issues both topics raise concerning the legal validity of decisions made by sports organizations, especially in a science-related context. This blog focuses on those more ‘legal’ aspects, through the prism of the decision of the CAS in the Dutee Chand matter and its legal implications. After touching briefly on the background of the case, we will comment on two aspects of the Chand award with respect to challenges in regulating hyperandrogenism in sport within the confines of the law: First from the viewpoint of a CAS panel called upon to evaluate the validity of a set of regulations, and second from the viewpoint of the sports organizations seeking to both adequately protect fairness in sport and to provide a legally valid (and effective) regulatory solution.[1]

Background of the Case

In 2014, Dutee Chand, an internationally successful, young track-and-field athlete, was provisionally suspended from participation in any athletic events by the Athletics Federation of India (the “AFI”),[2] as a result of a series of medical examinations that suggested her “male hormone” levels were elevated.[3] Dutee Chand filed an appeal against this decision to the CAS, naming both the AFI and the IAAF as respondents. She asked the CAS panel to (i) declare the Hyperandrogenism Regulations invalid, and (ii) overturn the AFI’s decision and clear her to compete. The second request for relief, however, was dropped during the course of the proceeding, thus the award addressed only the issue of the Regulation’s validity.

The IAAF Regulations Governing Eligibility of Females with Hyperandrogenism to Compete in Women’s Competition (“Hyperandrogenism Regulations” or “the Regulations”) govern the eligibility of female athletes with a condition known as ‘hyperandrogenism’ to participate in the female category of athletic events. Schematically, the Regulations provide that in order to be eligible to participate in the female category, a woman must have androgen levels below the “normal male range,” which is defined as testosterone levels falling below a threshold of 10 nmol/L.[4] An athlete with testosterone levels reported above this threshold may still be allowed to compete if she establishes, by a balance of probabilities, that she “derives no competitive advantage from having androgen levels in the normal male range”.[5] Cases of suspected hyperandrogenism may be investigated according to three levels of medical assessment, potentially including tests targeting physical, laboratory, genetic, imaging, and psychological assessments. Should an athlete be eventually diagnosed with hyperandrogenism, the stakes are high: in order to return to competition, athletes need to undergo medical treatment to reduce their testosterone levels below the ‘admissible’ threshold.

Dutee Chand challenged the Regulations’ validity on several grounds, which the CAS panel considered after addressing the parties’ respective burdens and standards of proof in an initial section. The grounds examined were unlawful discrimination, lack of scientific validity, breach of proportionality, and conflict with the World Anti-Doping Code (“WADC”).

Challenges CAS panels face in assessing the validity of sports regulations

The Chand award formidably illustrates the challenges an arbitration panel faces when asked to reach a conclusion on the ‘legal validity’ of a set of sports regulations, especially when such assessment implies delving into complex scientific issues. Each of these challenges can provide valuable ‘lessons learned’ for future CAS panels confronted with comparable issues.

Reconciling the ‘abstract’ and ‘concrete’ facets of the dispute

Ostensibly, the object of the CAS proceedings was for Dutee Chand to be cleared to resume competing as a female athlete, in other words, for the decision rendered against her by the AFI to be set aside[6]. But this ‘concrete’ request for relief was dropped at the hearing, leaving the panel with only the ‘abstract’ question of the Regulation’s validity to consider. It appears that the CAS panel was asked between the lines to render an informal advisory opinion on the legitimacy of the current approach to hyperandrogenism in sport; the formal advisory opinion is an instrument no longer available under the CAS Code.[7]

This left the CAS panel in an uncomfortable position: having to decide on abstract legal questions without the benefit of a concrete set of facts to rely upon. Symptomatically, the background presented in the award regarding the Athlete’s actual situation is tenuous. The award does not even discuss whether Dutee Chand’s testosterone levels actually exceeded the 10nmol/L threshold set in the Hyperandrogenism Regulations[8]. The CAS panel simply conducted its entire assessment under the - unverified - assumption of her being genuinely an athlete with hyperandrogenism within the meaning of the Regulations.

Moreover, real questions of defence strategy relevant to counsel appearing before CAS can be raised here: had Dutee Chand not waived her request for relief directed against the AFI decision, the CAS panel would have been forced to render a final award on her case and could not have left her in the legal limbo in which she is now (see below, on the rendering of an interim rather than a final award).

The CAS has often – explicitly or through the decision of its panels ­shown ambition to act as a harmonising body, an ‘international’ or ‘supreme’ court of sport.[9] From a perspective of sports policy, that may be – depending on the opinion – a desirable objective, or an illegitimate attempt for sports governing bodies to shield their regulations from the judicial review of state courts. From a strictly legal perspective, it is questionable whether CAS panels have at their disposal the means to fulfil this ambition. CAS panels are arbitration tribunals in arbitral proceedings conducted under Swiss arbitration law. As such, they only have the power to rule on a dispute brought before them by two – or more – specific parties, and they can only render decisions on requests for relief that a party has submitted to them, within the framework of the facts put forward by the parties. Approaches such as the one taken in the Chand award should not be encouraged, especially in this odd combination in which a CAS panel would accept to rule on abstract requests for relief that are not directly decisive to the outcome of the dispute.

Allocating the burden of proof to prove or disprove the Regulation’s validity

For reasons that are not readily apparent from the award, the CAS panel separated its assessment of the Regulations’ scientific basis into two limbs: i.) one referred to as an assessment of the ‘scientific validity’ of the Regulations, for which Dutee Chand was said to have accepted the burden of proof, and ii.) one referred to as a justification for the prima facie discrimination and considered part of the proportionality assessment, for which the IAAF was assigned the burden of proof[10]. For both limbs, the CAS panel ended up holding that the party bearing the burden of proof failed to discharge its burden, due to lack of sufficient scientific evidence.

The reasoning of the CAS panels in the award makes it rather obvious that the two limbs are conceptually one and the same: Both assess the question of whether the infringement upon female athletes’ rights entailed by the Regulations could be justified by a sufficiently strong scientific basis. Assigning the burden with respect to the general ‘scientific validity’ to Dutee Chand (i.e. the use of testosterone as a valid marker for purposes of the Regulations) and the burden with respect to another aspect of ‘scientific validity’ (i.e. the threshold set in the Regulations for that marker) to the IAAF (via the proportionality test), as the panel did, created an artificial separation in the legal analysis, by dressing the same issue in two different hats.

From the viewpoint of legal technique, this separation appears questionable and unnecessarily complicated. The assumption, from a viewpoint of judicial policy, is that the separation provided the arbitrators with an argument to both support the general thinking underpinning the Regulations (i.e. the use of testosterone levels as a marker) by considering that it was not without scientific basis, while at the same time finding the Regulations lacked sufficient strength in their modalities (i.e. the extent of the advantage conferred to hyperandrogenic athletes by their testosterone levels) to be upheld.

Differentiating between fact-finding and legal appreciation

Whether sports regulations have a sufficiently strong basis in science does not pertain to the fact-finding process, but to the CAS panel’s appreciation of the legal validity ­ or justification (including proportionality) ­ of those regulations. In this particular set-up, the question of ‘scientific validity’ is thus not strictly speaking one related to the burden of proof, as the Chand award would imply, but reflects which party suffers consequences if a CAS panel is not able to make sense of the scientific state-of-knowledge. The prospect of suffering adverse consequences indirectly provides an incentive for parties to present studies and expert opinions in support of their position, but does not qualify as a burden of proof stricto sensu, which only applies to issues of fact[11].

Nevertheless, the outcome of the CAS panel’s reasoning in the Chand matter appears justified: To the extent that the Hyperandrogenism Regulations represent an infringement on certain athletes’ rights (or, as the award considered it, in cases of discrimination), such infringement or discrimination has to be justified to be considered valid. In the case of the Hyperandrogenism Regulations, the alleged justification was based on the scientific basis behind the mechanics of the regulations. Thus, if no such basis could be shown, the CAS panel was bound to consider the Hyperandrogenism Regulations invalid. The CAS panel, in the particular matter, reached the same outcome by assigning the burden of proof on the issue it ultimately declared decisive to the IAAF, i.e. whether the manner in which testosterone was used as marker in the Regulations (especially the threshold value) could claim a sufficiently solid scientific basis.

Accounting for the role of scientific uncertainty

A truly important message to retain from the CAS award on scientific validity is the crucial role that ‘scientific uncertainty’ bears for the legal rule-making or adjudicative process. ‘Scientific uncertainty’ here refers to situations in which no consensus can be found within the scientific community, in which various expert positions coexist, or in which experts agree that the state-of-knowledge does not allow for a definitive answer. In all cases, the science is ‘unsettled’ in a manner that makes it impossible for the legal actors to extract a clear-cut finding that would suit their purposes. By nature, situations of ‘scientific uncertainty’ are the most likely to lead to legal disputes. CAS panels are frequently confronted with this constellation in doping matters or other science-related disputes brought before them.

The result of the panel’s assessment of the scientific foundations for the Regulations – whether desirable or not, justified or not – was hence utterly predictable. It was pre-determined from the moment the CAS panel decided that the IAAF would have the burden of proof on the very issue that would ultimately prove decisive for the outcome of a dispute. Allocating the burden of proof on a scientific issue amounts to assigning to one party (or one category of party) the risk of scientific uncertainty. Since disputed scientific issues are likely to result in the panel being unable to make up its mind one way or another, thus having to fall back on the burden of proof, the party that carries this risk of scientific uncertainty is almost certain to lose its case.

(Avoiding) reaching a legal conclusion on a highly sensitive issue

At the end of their analysis, the CAS arbitrators reached the conclusion that the IAAF had not discharged its burden of proof and that they were therefore unable to uphold the validity of the Hyperandrogenism Regulations based on the evidence before them[12]. The logical (and legal) consequence would have been for the panel to render a final award in accordance with these conclusions and grant the athlete’s request for relief. However, the panel took a different – and unusual ­ option, of issuing a decision they referred to as “interim award” instead.

One fails to see the rationale for such a decision. The approach may well be pragmatic, since it relieved (at least temporarily) the CAS panel of the need to make a final binding decision on a complex social and political issue, and allowed Dutee Chand to resume competition while at the same time providing a (provisional) framework for international athletic competitions with respect to participation of hyperandrogenic athletes.[13] However, issuing an “interim award” in this matter is not justifiable from the perspective of arbitration law. This is all the more true given that none of the parties appears to have requested the issuing of a preliminary decision in the proceedings, nor even to have contemplated this type of outcome. Its legitimacy under the CAS Code – which is conceived to guarantee an efficient procedural framework on CAS proceedings – is equally questionable. Moreover, the choice of issuing an ‘interim award’ has far-reaching legal and practical consequences for the dispute that further call into doubt the nature of Dutee Chand’s ‘victory’, including the following:

• The CAS proceeding number ‘CAS 2014/A/3759’ is not closed. The CAS panel remains formally constituted for the remainder of the two-year period assigned to the IAAF. If the IAAF does not submit further evidence, the CAS panels will need to make a final award taking note of such failure and drawing the consequences thereof, which could then be appealed before the Swiss Supreme Court;

• The “interim award” can only be appealed to the Swiss Supreme Court on very restrictive grounds under the Swiss Private International Law Act (Article 190, para. 3). Only an appeal for grounds of irregular composition of the tribunal or lack of jurisdiction could be filed, none of which would seem of relevance to the present matter. The other grounds for challenging an arbitral award – in particular the right to be heard or public policy – cannot be raised in an appeal against an interim award. This de facto bars the parties from appealing the award before the elapse of the two-year period; and

• The award does not acquire a res iudicata effect and cannot be enforced, though it binds the panel itself to its own determinations (as opposed to a mere procedural order).[14] Its effect for other athletes potentially concerned by decisions made under national regulations implemented to reflect the Hyperandrogenism Regulations is thus uncertain. In theory, but for the panel’s expectations that the IAAF will act based on the sport hierarchy, a national federation that was not a party to the dispute could still make a decision against an athlete.

While CAS panels may order further evidentiary measures on their own initiative and request a party to adduce further evidence, the CAS Code certainly does not envisage that a party could be given a period of two years to do so. Rendering an interim award in these circumstances could be considered to amount to a denial of justice, i.e. a refusal by the CAS panel to rule on the request for relief properly submitted to it. The time limit granted unilaterally, to one of the parties only, could also be seen as conflicting with equality of the parties.[15] Should the IAAF return with additional evidence during the two-year period, would Dutee Chand also be granted an equivalent time limit to respond to the evidence?

Challenges sports organisations face in navigating the interface between law and science

The debate surrounding the definition of male and female is a complex one, not only in sport but in various domains of society. This means that a sports organisation’s task of making policy decisions that adequately account for these complexities is far from straightforward.

Unlike former policies in sport, the manner in which the IAAF – and other sports federations based on the policy of the IOC – set out to deal with hyperandrogenism as of 2012 does not formally aim at defining an athlete’s sex. Hence, it does not represent a ‘gender or sex testing’ process stricto sensu. Instead, the CAS panel in the Dutee Chand case acknowledged that whether a person is to be considered ‘female’ from the viewpoint of participation in athletics relies on the criterion of whether a person is a female as a matter of law[16]. The Hyperandrogenism Regulations do not – at least not from a legal viewpoint ­ purport to decide whether someone is female or not. Ironically, this shift in approach that was to take away from sports authorities the controversial power to assign a ‘gender’ to an individual for purposes of taking part in its competitions is precisely what has brought those authorities into the dilemma of having to introduce corrective factors in the name of a level playing field.

Indeed, the Regulations seek to police a divide based on an issue of law (whether someone is a female ‘as a matter of law’) through a corrective factor that relies on a biological parameter, which is an issue of fact (the person’s level of testosterone); an approach that is bound to lead to a sense of unfairness in borderline situations. Undoubtedly, one major flaw in the system was that the corrective factor had the effect of excluding athletes from the category into which they fit as a matter of law, without offering them the option to compete in the category in which the corrective factor would place them. The IOC Medical & Scientific Commission statement subsequently issued (see below, in the concluding remarks) encourages a solution whereby legally female athletes who fail to meet the requirements of Hyperandrogenism Regulations would be authorized to compete in the male category. This solution would at least have the merits of removing this blatant inconsistency of the system. However, one can legitimately wonder if, de facto, it would not have the same effect of excluding hyperandrogenic women from elite competition entirely.

To entirely reframe the approach to sex categories in sport – without the mixture of legal and biological corrective factors chosen in the Hyperandrogenism Regulations – would suppose one of the following:

1. redefining the definition of ‘sex’ for purposes of sports categories based only on biological criteria, i.e. the level of testosterone or other biological factors deemed appropriate,
2. abandoning the use of corrective factors, and referring to an individual’s sex exclusively as a matter of law, or
3. abandoning any form of sports category related to sex and/or gender altogether.

It seems predictable that any of these options would imply some sort of compromise and entail new legal challenges. In particular, it is important to note that even if one should simply abandon any regulation on hyperandrogenism (or, more generally, on intersex matters), the question of how to legally define a ‘female’ would remain. In particular, the CAS panel in the Chand matter noted that whether someone is a male or female “is a matter of law”[17]. This immediately raises a follow-up question, namely: “what law?”. And, of equal importance, how does the applicable law approach this question? Options could range from self-identification to reliance on a complex set of scientific criteria, with each solution bringing its own challenges. Relying exclusively, as has been suggested[18], on the manner in which a person was raised and/or perceives him-/herself within society might prove difficult to crystallize into a firm legal criterion.

Even as sports regulations strives towards fairness and removing barriers to ‘pure’ competition, it must be recognized that the best that sports organizations can aim for in this context is to strike a reasonable balance between seeking a level playing field and celebrating natural advantages. On a deeper level, it also supposes a discussion as to how lawyers can and/or may make decisions that will profoundly affect individuals when science appears unable to provide the data needed to make sound legal choices.

Concluding remarks

Perhaps the most striking aspect of the Chand matter ­ as revealed by its aftermath ­ is the limited impact a CAS award addressing abstract legal issues can exert in practice.

The Chand award did not end the hyperandrogenism debate. In November 2015 – over four months after the Chand award was published ­ the IOC Medical & Scientific Commission, after holding a Consensus Meeting on Sex Reassignment and Hyperandrogenism, reaffirmed its position by insisting on the need to have rules in place “for the protection of women in sport and the promotion of the principles of fair competition”. The statement also encourages the IAAF, with support of other sports organizations, “to revert to CAS with arguments and evidence to support the reinstatement of its hyperandrogenism rules”. The IOC’s reaction to the interim award rendered shows that little progress was made in resolving the dispute over the validity of the Hyperandrogenism Regulations. As an only sign of a shift in its position, the statement recommends that “to avoid discrimination, if not eligible for female competition the Athlete should be eligible to compete in male competition”.[19] The new IOC position, which in effect represents a step towards considering the testosterone threshold as the only decisive criterion for determining the boundary between male and female athletes, immediately triggered critical reactions – both as to the modalities of its adoption and as to its contents – on part of circles close to Dutee Chand’s defence and opposed to regulations on hyperandrogenism.

Thus, the CAS award does not seem to have altered either camp’s position. This may be in part a side effect of the panel’s decision to opt for an interim award, but also demonstrates more generally the limitations on the power of law, regulatory bodies and judicial authorities to resolve disputes of such scientific and ethical dimension.

[1] For a more detailed analysis of the Chand award, see M Viret and E Wisnosky, Controlling “Femaleness” in Sports: Regulatory challenges at the intersection of health, performance and identity, in A Duval and A Rigozzi, eds., Yearbook of International Sports Arbitration, to be published.

[2] CAS 2014/A/3759, Dutee Chand v. AFI & IAAF, 24 July 2015.at [27]­[28]. As reported in the award, the text of the Decision Letter read in relevant part: “Based on your medical reports received from Sports Authority of India and a copy of the same has already been handed over to you by SAI in person, you are hereby provisionally stopped from participation in any Competition in athletics with immediate effect.

To be eligible for participation, you are further advised to follow the annexed IAAF guidelines”. [27]. Ms. Chand stated that the letter incorrectly enclosed the IAAF Sex Reassignment Regulations rather than the Hyperandrogenism Regulations [28].

[4] Hyperandrogenism Regulations, art. 6.5(i).

[5] Hyperandrogenism Regulations, art. 6.5(ii).

[6] Dutee Chand initially submitted two requests for relief, namely that a.) “[T]he Hyperandrogenism Regulation[s] be declared invalid and void; and, b.)[T]he Decision Letter [note: rendered by the AFI against Ms. Chand] be set aside and she be declared eligible to compete (Chand award at [104]).

[7] CAS’ consultation proceedings were abrogated in the 2012 review of the CAS Code.

[8] Chand award at [36]

[9] “The ‘Digest of CAS Awards 1986-1998’ recorded the emergence of a lex sportiva through the judicial decisions of the CAS. It is true that one of the interests of this court is to develop a jurisprudence that can be used as a reference by all the actors of world sport, thereby encouraging the harmonisation of the judicial rules and principles applied within the sports world.” (CAS Digest II, Reeb, p. xxix).

[10] A detailed analysis of the CAS panel’s reasoning can be found in Viret and Wisnosky 2016.

[11] For more details, see Viret and Wisnosky 2016, on the lack of clear distinction between issues of fact (which parties can agree upon) and issues of law, such as the burden and standard of proof and scientific validity (which is for a hearing panel to decide) in the Chand award.

[12] Chand award at [536].

[13] J Paulsson, Assessing the Usefulness and Legitimacy of CAS, SchiedsVZ 2015, pp. 263-269, p. 269.

[14] G Kaufmann-Kohler and A Rigozzi, International Arbitration: Law and Practice in Switzerland, Oxford University Press, Oxford 2015, paras 7.105-7.106.

[15] See Chand award at [442]. In particular, the Athlete accepted the burden of proof with respect to the “issue of scientific basis” of the Hyperandrogenism Regulations, a burden that the CAS panel considered had equally not been discharged.

[16] Chand award at [510]

[17] Chand award at [510].

[18] See e.g. M Genel, J L Simpson and A de la Chapelle, The Olympic Games and Athletic Sex Assignment, Journal of the American Medical Association, Published online August 04, 2016.

[19] IOC (2015) IOC Consensus Meeting on Sex Reassignment and Hyperandrogenism November 2015