Introduction: FIFA’s TPO ban and its compatibility with EU competition law.
Day 1: FIFA must regulate TPO, not ban it.
Day 2: Third-party entitlement to shares of transfer fees: problems and solutions
Day 3: The Impact of the TPO Ban on South American Football.
Day 5: Why FIFA's TPO ban is justified.

Editor's note: In this fourth part of our blog symposium on FIFA's TPO ban Daniel Geey shares his 'UK perspective' on the ban. The English Premier League being one of the first leagues to have outlawed TPO in 2010, Daniel will outline the regulatory steps taken to do so and critically assess them. Daniel is an associate in Field Fisher Waterhouse LLP's Competition and EU Regulatory Law Group. As well as being a famous 'football law' twitterer, he has also published numerous articles and blogs on the subject.

What is Third Party Investment?
In brief Third Party Investment (TPI) in the football industry, is where a football club does not own, or is not entitled to, 100% of the future transfer value of a player that is registered to play for that team. There are numerous models for third party player agreements but the basic premise is that companies, businesses and/or individuals provide football clubs or players with money in return for owning a percentage of a player’s future transfer value. This transfer value is also commonly referred to as a player’s economic rights. There are instances where entities will act as speculators by purchasing a percentage share in a player directly from a club in return for a lump sum that the club can then use as it wishes.

Why did the Premier League ban the practice?
The Premier League, Football League, Football Association, the Polish and French leagues have all brought in TPI bans. The original ban in the Premier League came as a result of the Tévez affair where a third party owner had the contractual right to force West Ham to sell the player if a suitable bid was received. This was against the 'material influence' regulations that were in place at the time. Previously, there was no express clause prohibiting TPI; only the act of influencing a club’s policies or performance was forbidden. Tévez’s third party contract contained a clause giving exclusive power to the third party owners, MSI and Just Sports, to facilitate the transfer of the player. West Ham did not have a veto over this right and such a stipulation breached the above Premier League rule as it meant that outside parties had material influence over the decision making of West Ham.
A common misconception throughout and after the Tévez case was that any third party player owner would have been in breach of the Premier League rules. This was not the case. It was the clause giving the owners of Tévez influence over West Ham which incurred the Premier League’s wrath (plus the non-disclosure of the agreement itself). It was for this reason that West Ham was judged to have breached the old Premier League rule Rule U18 and fined £5.5 million by the Premier League.
Subsequently, the Premier League significantly strengthened its regulations to prohibit any type of TPI. Other leagues followed as a result. The Premier League decided that from the beginning of the 2008/9 season an absolute ban on TPI was required. A spokesman stated:
“The clubs decided that third-party ownership was something they did not want to see. It raises too many issues over the integrity of competition, the development of young players and the potential impact on the football pyramid. It was felt the Premier League was in a position to take a stand on this. No one wants to see what has happened to club football in South America repeated over here”.

There are also Football League and Football Association rules prohibiting TPI but the below analysis takes the Premier League rules by way of example. Current Premier League Rules U39-40 (which at the time were rules L34-35) govern the actual prohibition and buy-out mechanism.
Premier League Rule U39 is the exemption rule which covers scenarios where clubs are allowed to receive money or incur a liability, for example, for the player registration or transfer of a player registration. Such instances include payments or receipts of transfer fees, loan fees and sell-on fees, payments for image rights contracts, payments for agency/intermediary work and payment of training compensation and solidarity contributions as set out in the FIFA regulations.
Premier League rule U40 is the mechanism to enable a third party owned player to transfer to a Premier League club. This can occur so long as the Premier League club purchases the third party’s economic interest in the player. It states:
"In respect of a player whom it applies to register as a Contract Player, a Club is permitted to make a payment to buy out the interest of a person or entity who, not being a Club or club, nevertheless has an agreement either with the club with which the player is registered, or with the player, granting it the right to receive money from a new Club or club for which that player becomes registered. Any such payment which is not dependent on the happening of a contingent event may be made either in one lump sum or in instalments provided that all such instalments are paid on or before the expiry date of the initial contract between the Club and the player. Any such payment which is payable upon the happening of a contingent event shall be payable within 7 days of the happening of that event".
This ensures that any future transfer sums, should the player be subsequently sold, would be kept by the selling Premier League club and eliminates any third party element to any future sale transaction. Interestingly, the Premier League club who 'buys-out' the third party interest may still be paying the third party investor through installments during the period that the player is playing for his new Premier League club. Whilst the player is owned by the club and no third party interest is possible, there is still the eventuality that a club could default on the installment plan and then the third party investor could sue based on the buy-out obligations in the contract. It would be unlikely yet is unclear from the regulations whether the investment stake could be transferred back to third party investor if default occurred or what other alternative recourse that an investor may have.
Nonetheless, any player registered to play in the Premier League cannot be third party owned by a TPI company. It means that the buying Premier League club has to satisfy the football authorities that all other economic interests have been extinguished. This occurred over the summer when TPI players Markovic and Mangala were transferred to Liverpool and Manchester City respectively. Premier League clubs undertake to the football authorities that it is the only entity that owns the player’s economic rights and only then can the transfer can be completed. It is likely that Falcao had a TPI contract whilst he was at Porto but as the French league also prohibits TPI, when Monaco bought him, there may well have been a requirement in place to extinguish any third party rights. As such, when he was then loaned to Manchester United this summer, his TPI rights would certainly have been extinguished to ensure there were no major complications with his Premier League registration.

Why is it such a problem?
As the Premier League spokesman explained above, their major concerns related to integrity, youth player development and money flowing out of the game. An internal FIFA report recently concluded that TPI trapped clubs in a “vicious cycle of debt and dependence” and “posed risks to players and to the integrity of the game”.
The main concerns about TPI include:
1. Conflicts of interests can potentially occur between investors, club owners, agents and coaches. For example, what if the owner of Club A also owns an economic stake in Player B playing against his club? What if an agent of a manager who buys TPI players is also an advisor of a TPI fund? Regardless of any actual conflict, there is certainly a perceived conflict which may damage the image of the game, public confidence in integrity of competitions and even lead to potential match-fixing or insider trading concerns. Questions continue to be asked over the transparency of the TPI funds and what role they have, if any, in influencing clubs.
2. Clubs become reliant on such funding which in turn leads to dependence on external owners to continue to assist in such financing arrangements. As such, TPI encourages short-term profit making with economic owners looking to the club to sell its players to realise their ‘asset’ ahead of purely on-field sporting concerns. The consequence is that the rapid turnover of TPI players at certain clubs means fans become less loyal to the players who know they will be transferred when the right offer is received. Clubs are seen as a short term ‘speculation tools’ with the result that money leaves the football family.

Why is the practice necessary?
To counter the arguments set out above, the following points demonstrate are why TPI is so vital for many clubs around the world.
1. A growing number of clubs cannot compete with the larger commercial and broadcasting deals of the bigger European leagues. Clubs in so-called smaller European leagues, for example, need to leverage their assets and find innovative ways to find competitive advantage for playing against teams in the Champions League.
2. Purchasing players is an inherently risky business. Clubs with less money to spend would therefore usually be more risk-averse when having to invest heavily in transfers. One way of limiting such risk, is to share the financial burden. Therefore contracts are entered into between economic owners and clubs to either help the club with the purchase price for a talented individual or free up capital and ‘monetise’ a current players value whilst he still remains at the club. In either event, the club benefits from external finance that cushions the club’s position if the player is not a world beater. Both the club and the fund then benefit if the player is a success through a large transfer fee received that is shared according to the contract.
3. There are various ways to alleviate conflict of interest, integrity and transparency issues. Instead of banning TPI, many believe regulation through a transparent approach to TPI by disclosing a register of interests would alleviate a number of concerns as well as making TPI contracts available to FIFA/UEFA to ensure ‘material influence’ issues are correctly dealt with in the TPI contracts.
With FIFA regulating to ban players who are third party owned, many are questioning whether regulation of the practice rather than an outright ban would be preferable. In addition, some believe that it is not a ban but total transparency of the arrangements that is required. This could even be expanded to include a list of the owners of such transfer rights. Such transparency could allow the football family to scrutinise any potential conflicts of interest between, for example, those who own the economic rights of a player and those who also own a stake in a football club. With FIFA’s regulation governing the TPI prohibition, UEFA and FIFPro have backed such a position too.

What is the current state of play?
The current FIFA Rule Article 18bis of FIFA’s Rules on the Status and Transfer of Players states that:
“No club shall enter into a contract which enables any other party to that contract or any third party to acquire the ability to influence in employment and transfer related matters its independence, its policies or the performance of its teams.”
This was not a specific ban on TPI but a ban on a third party owner from influencing a club’s employment or transfer related matters.
Throughout 2014, UEFA and FIFA made a number of public statements concerning their aim to outlaw TPI. In September FIFA’s President Sepp Blatter explained that:
“We took a firm decision that [TPI] should be banned but it cannot be banned immediately there will be a transitional period”.
FIFA then set up a working group to address the topic of TPI. At the time, in their press release there was no explicit mention of a ban but “to analyse all possible regulatory options in relation to this complex practice and to make preliminary suggestions”. It was to the surprise of many that in late December, whilst the working group was still debating several possibilities that FIFA announced that they were to ban TPI globally. It is important to set out the exact wording of the FIFA circular to grasp the wide scope of the prohibition. Specifically, a third party is defined as "a party other than the two clubs transferring a player from one to the other, or any previous club, with which the player has been registered".
"Article 18ter Third-party ownership of players' economic rights
1. No club or player shall enter into an agreement with a third party whereby a third party is being entitled to participate, either in full or in part, in compensation payable in relation to the future transfer of a player from one club to another, or is being assigned any rights in relation to a future transfer or transfer compensation.
2. The interdiction as per paragraph 1 comes into force on 1 May 2015.
3. Agreements covered by paragraph 1 which predate 1 May 2015 may continue to be in place until their contractual expiration. However, their duration may not be extended.
4. The validity of any agreement covered by paragraph 1 signed between 1 January 2015 and 30 April 2015 may not have a contractual duration of more than 1 year beyond the effective date.
5. By the end of April 2015, all existing agreements covered by paragraph 1 need to be recorded within the Transfer Matching System (TMS). All clubs that have signed such agreements are required to upload them in their entirety, including possible annexes or amendments, in TMS, specifying the details of the third party concerned, the full name of the player as well as the duration of the agreement.
6. The FIFA Disciplinary Committee may impose disciplinary measures on clubs or players that do not observe the obligations set out in this article".
Article 18ter imposes a blanket global ban for TPI specifically forbidding any entity that is not a club from being entitled to future economic rights and/or transfer compensation. Whilst it has been explicitly considered that the prohibition only comes into force in May 2015, agreements entered into from 1 January can only be one year in length. This effectively reduces the possibility of new TPI contracts being entered into. Interestingly, Sporting Lisbon for example, recently announced that they had bought back a number of economic rights contracts from third party investors. They presumably considered that their position may well have been strengthened as a result of the new regulations.
Nonetheless, existing third party contracts will continue until expiry meaning that some players may still be subject to third party investment contracts for a number of seasons to come.  Such contracts will however be monitored through FIFA's TMS system as any club will be required to disclose a valid third party contract due to the mandatory disclosure obligations set out in paragraph 5 above. Such obligations are required to be adhered to in a relatively short time period (by the end of April 2015). The result of such disclosure may be that the contracts submitted to FIFA may themselves breach Article 18bis, for example, regarding TPI material influence clauses. Clubs will be faced with the obligation to provide all continuing TPI contracts to FIFA and will be subject to disciplinary measures if they do not. There is now an added compliance factor for clubs to adhere to under the new regulations and a variety of disciplinary cases against clubs should not be ruled out.
Lastly, the Portuguese and Spanish leagues are reported to have made a formal complaint to the European Commission, presumably assessing that Article 18ter is contrary to the free movement and competition rules. They will no doubt be arguing that the absolute ban that FIFA has imposed, is disproportionate i.e. that there are less restrictive ways of achieving the same objective.
Many have suggested that regulating TPI through transparency and disclosure obligations is a better alternative than an outright ban. It will be for the European Commission to decide whether to take the complaint forward and make a more substantive assessment or to reject the complaint. It should be noted that when the Premier League banned TPI, although there were some that argued that the prohibition breached competition law, no one actually came forward to challenge the regulation. A mere two months after FIFA announced the ban did the two Iberian associations challenge Article 18ter. That suggests, as many believe, that TPI has played an integral part in the way that clubs in those leagues use finance to 'de-risk' transfers and compete against clubs in associations with higher revenue generating capabilities. TPI has been an essential financing option.

Conclusion

Whilst the Premier League, as a reaction to the Tévez affair, made a strong policy decision to ban the practice in its league, a more fundamental shift is occurring on the global stage. Football specifically is very much in the European Commission's view with current Intermediary and TPI complaints and a previous Financial Fair Play complaint that was rejected but is now before the Belgian national courts. The TPI complaint will not be a quick process and in the meantime, unless interim relief is sought, existing TPI contracts will soon have to be lodged with FIFA and from 1 May, no new contracts can be entered into. Whether the practice is banned for good is now in the hands of the European Commission

The Pechstein decision of the Oberlandesgericht of Munich is “ground-breaking”, “earth-shaking”, “revolutionary”, name it. It was the outmost duty of a “German-reading” sports lawyer to translate it as fast as possible in order to make it available for the sports law community at large (Disclaimer: This is not an official translation and I am no certified legal translator). Below you will find the rough translation of the ruling (the full German text is available here), it is omitting solely the parts, which are of no direct interest to international sports law.

The future of CAS is in the balance and this ruling should trigger some serious rethinking of the institutional set-up that underpins it. As you will see, the ruling is not destructive, the Court is rather favourable to the function of CAS in the sporting context, but it requires a fundamental institutional reshuffling. It also offers a fruitful legal strategy to challenge CAS awards that could be used in front of any national court of the EU as it is based on reasoning analogically applicable to article 102 TFEU (on abuse of a dominant position), which is valid across the EU’s territory.

Enjoy the read! 

Antoine

PS: The translation can also be downloaded at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2561297

OLG München · 15 January 2015 · Az. U 1110/14 Kart

Part 1. The facts (omitted)

Part 2. Holdings of the Court

A. The claim is partially receivable

I. The international competence of the German courts (omitted)

67 - II. The arbitration clause signed on the 2 January 2009 by the appellant (Pechstein) and the respondent nr 2 (ISU) does not preclude access to the ordinary courts

68 - To this end the question whether the CAS, designated by the arbitration clause, can be considered a real arbitration tribunal, despite the fact the parties have no equal influence on its composition, can stay open. The arbitration clause would also be null in that case.

1. […]

2. […]

71 - 3. The arbitration clause is in the present case inapplicable because it goes against antitrust law

a) […]

aa) […]

bb) […]

75 - b) The arbitration clause signed on the 2 January 2009 between Pechstein and ISU is invalid based on Art. 34 EGBGB, §134 BGB, §19 Abs. 1, Abs.  4 Nr. 2 GWB.

76 - aa) The ISU is a monopolist on the market for the access to Speed-Skating World Championships and therefore in a dominant position in the sense of §19 Abs.1, Abs 4 Nr. 2 GWB.

77 - An economic activity, in the sense of the German Act against restraints of Competition (GWB), is any activity consisting of offering goods or services on a market. If this condition is fulfilled, the fact that an activity is linked to sport cannot preclude the application of the Competition rules (C-49/07 MOTOE v. Greece). Sports associations offering their services on the market of sports competitions are to be considered undertakings.

78 - In the present case, the market for the organisation of the World Championships in speed skating is the relevant market. Contrary to the view of ISU, the participation to the event cannot be supplanted by the participation in national competitions, due to the worldwide interest it triggers and the connected side revenues that successful athletes can hope for.

79 – […]Moreover, it is not convincing to argue that international events as the Open Belrus Cup, the Cup of Kazakhstan, the Dutch Classics or the International Race-Seniors could trigger the same interest and be substitutable to the World Championships.

80 - ISU is thus, because of the “One-place-principle”[1], the only provider on the market for the organisation of World Championships in Speed-Skating and therefore, due to the absence of competition, a monopolist in a dominant position in the sense of § 19 Abs. 2 Nr. 1 GWB.

81 - bb) An undertaking in a dominant position is prohibited under § 19 Abs. 1, Abs. 4 Nr. 2 GWB from demanding payment or other business terms which differ from those which would very likely arise if effective competition existed.

82 - Hence, the ISU could not require Pechstein to agree to the arbitration clause signed on 2 January 2009.

83 - (1) The notion of terms of trade is be understood broadly. It comprises everything that can be agreed on contractually, including an agreement to arbitrate disputes excluding the recourse to national courts.

84 - aaa) Contrary to the opinion of ISU, the applicability of § 19 Abs. 1, Abs. 4 Nr. 2 GWB is not precluded because the signing of the arbitration clause was mandated to ISU by the International Convention Against Doping in Sport from the 19^th October 2005 ratified by Switzerland.

85 - The Convention does not include a rule imposing a duty to conclude an arbitration clause in favour of CAS. Rather, it refers in Art. 4 §1 to the principles of the World Anti-Doping Code, which in turn in Article 13.2.1 provides that in cases involving international competitions or international athletes, appeals against anti-doping decisions can only be submitted to CAS. It cannot be assumed, despite the compliance mandate that the Code imposes to its signatories in Article 23.2.2, that the Convention includes this provision in the fundamental principles to which the State parties have to abide following Art.4 §1. Moreover, the obligations stemming from Art. 4 par.1 require transposition by the national states as foreseen by Art.5 1) of the Convention. It is not clear from the submissions of ISU that Switzerland has introduced any law that would impose to ISU the duty to sign arbitration clauses in favour of CAS.

86 - The fact that the ISU may have felt that it had to sign arbitration clauses in favour of CAS due to other non-legal reasons, as for example to preserve its recognition by the IOC, is irrelevant in the context of this competition law analysis. 

87 – bbb) Omitted

88 - (2) The imposition of an arbitration clause by the organizer of International sporting competitions is not per se an abuse of a dominant position.

89 - aaa) In fact, sound and weighty arguments speak in favour of avoiding to leave to the many potentially competent national courts the duty to deal with disputes arising between athletes and International federations in the framework of international competitions, and instead to refer them to a single sports tribunal. In particular, a uniform competence and procedure can preclude that similar cases be decided differently, and therefore safeguard the equal opportunities of athletes during the competitions.

90 - bbb) Contrary to the view of the first instance court, arbitration agreements between a dominant organizer of international sports competitions and the athlete taking part in these competitions are not per se invalid due to the lack of free will of the athlete.

91 - Omitted

92 - Art 6 par. 1 ECHR is opposed to the validity of an arbitration agreement to which one of the parties has not acquiesced. But, if consent is present, the sole fact that this consent was necessary economically to be able to exercise one’s profession is not sufficient to constitute a violation of the rights warranted by Art.6 par.1 ECHR. 

93 - (3) Nevertheless, the fact that ISU required from Pechstein to sign an arbitration agreement in favour of CAS is an abuse of dominant position.

94 - It can be assumed that, due to the above-mentioned advantages, athletes would agree to the competence of a neutral arbitral tribunal if free competition would prevail on the market for the organisation of international competitions. However, an arbitration clause in favour of CAS would not be agreed under normal circumstances, as the one-sided designation of the potential arbitrators favours the associations (the International federations – such as the ISU – the national Olympic Committees and the International Olympic Committee) involved in disputes with athletes as regard the composition of the arbitral panel. Athletes accept this arrangement only because they have to in order to participate in international sporting competitions. 

95 - aaa) The aforementioned sports associations have a decisive influence on the selection of the persons acting as CAS arbitrators

96 – a-1) Pursuant to the CAS procedural rules of 2004, in place at the moment of the signing of the arbitral convention, the parties have to select an arbitrator amongst the list of CAS arbitrators compiled by ICAS [R33 par.2 of the procedural rules and S6. Nr.3 of the Statutes].

97-103 […]The Court goes on to describe the composition of the ICAS as provided for in article S4 and the mode of selection of the arbitrators included on the CAS list as provided for in article S14 of the statutes. 

104 - These provisions regulating the selection of the potential CAS arbitrators favour the sports associations in disputes against athletes, thus embedding a structural imbalance that is threatening the neutrality of CAS.

105 - Sports association hold, with 12 members directly designated by them, the majority in ICAS. Already through this situation they enjoy, due to the majority rule applying in ICAS’ decision-making procedure, a favourable position that enables them to have a decisive influence on the composition of the list of CAS arbitrators. Furthermore, due to the fact that the 12 members previously designated by the sporting associations nominate them, the independence of the 8 other members of ICAS is also not preserved. Even the CAS statutes themselves do not assume the independence of the ICAS members and of the CAS arbitrators, as they require that the last 4 ICAS members and the last fifth of CAS arbitrators be independent from the organisations which were responsible for the nomination of all the other previous members of both ICAS and the CAS arbitrators list.

106 - This disproportionate influence creates the risk that the persons included on the CAS arbitrators list predominantly or even entirely favour the side of the sporting associations over the athletes. This is also true concerning the arbitrators that are not suggested by the sporting association, but are selected in view to protect the interest of athletes or on the basis of their independence, as they are designated by ICAS members chosen by the sporting associations. A balanced influence of the parties on the composition of the arbitral tribunal that would be needed to safeguard its independence is thus not provided. Such a structural deficiency threatens the neutrality of the arbitral tribunal; this is independent of the fact whether the persons included on the CAS list of arbitrators are in any way linked to the sports associations, as this would actually open the possibility to challenge their nomination. Even when the personal integrity of the persons included on the CAS list is not affected, there is a potential risk that arbitrators share the worldview of the sports associations rather than the one of the athletes.

107 - The imbalance in favour of the sports associations is not offset by the fact that the CAS arbitrators’ list comprises a minimum of 150 persons, as the risk of a potential capture by the sports associations extends to each one of them.

108 - a-2) Moreover, an imbalance in favour of the sports associations is also grounded in the fact that in the appeal procedure before CAS, when the parties have not managed to agree on a name (see R 50 par.1 procedural rules 2004), the president of the panel is designated by the president of the appeal division of CAS, while the president of the appeal division is himself nominated by ICAS, which is structurally dependent on the sporting associations, through a simple majority decision. In this way, the sports associations can also exercise an indirect influence on the third member of the arbitral panel competent to deal with a specific dispute. The trust of the parties in the independence and impartiality of an arbitral tribunal is eroded when there are reasons to fear that the judge facing them has been designated specifically in regard of the specific case at hand. Thus, it is necessary to take measures to combat the sheer possibility and suspicion of a manipulation of the designation of the judge.

109 - bbb) There is no rational justification for such an imbalance in favour of the sports associations 

110 - Contrary to the arguments of the ISU, a shared interest of the sports associations and the athletes cannot justify such an imbalance, as especially in disputes between athletes and sports associations no shared interest can be identified, to the contrary opposing interests are facing each other. In this regard, the fact that sports functionaries were often athletes in the past is also not a sufficient guarantee to ensure that the interests of the athletes are adequately protected.

111 - The circumstance that in a dispute between an international sports association and an athlete, the national sports association decides to support the athlete – as it was the case here in front of CAS - is not sufficient to challenge the fundamental homogeneity of the interests of the sports association. Surely, the national sports association concerned might have a specific interest that their own successful athlete be cleared, but other national sports associations do not share this interest so much that from a general point of view one can assume a homogeneity of the interests.[…]

112 - Finally, the argument of the ISU regarding the lack of organisation of the athletes that would hinder their participation in the drafting of the CAS arbitrators list must be rejected. If it would be impossible to involve athletes in the drafting of the list then athletes should be freed from their duty to nominate an arbitrator from the list, and be authorized to pick the arbitrator they wish – possibly under the condition of abstract qualification requirements.

113 - ccc) The reason why athletes accept to subject their disputes with sports associations to an arbitration tribunal, the composition of which is mainly determined by sports associations, is solely linked to the monopoly position of the sports associations. If the athlete could participate to the World Championship while agreeing to the competence of a neutral arbitration tribunal, we can safely assume that only this arbitration clause would be agreed upon to the detriment of the arbitral tribunal structurally favourable to the sports associations.

114 – Omitted

115 - ddd) The departure from arbitration agreements that would have been signed under normal conditions of competition strips Pechstein from her fundamental right of constitutional rank, flowing from the rule of law principles, to access to national courts and to a legally mandated judge (Art. 101 Abs. 1 Satz 2 GG). Hence, the arbitration agreement goes beyond the intensity threshold required for the recognition of an abuse of dominant position. 

116 - eee)[…] German law specific considerations to the notion of abuse of dominance not directly linked to the sporting context.

117 - (4) No need to discuss the other arguments raised by Pechstein against the CAS. […]

118 - cc) The arbitral convention is contrary to the ban on abuses of dominant position ((§ 19 Abs. 1, Abs. 4 Nr. 2 GWB) and therefore null and void on the basis of § 134 BGB. [...]

119 - c) The contradictory behaviour of Pechstein cannot justify refusing to grant her access to the ordinary courts.

120 - Based on its wording the arbitration clause covers a wide scope of potential disputes. The fact that Pechstein claims damages in front of the ordinary courts does not stand in contradiction with the fact that she challenged the doping sanction in front of CAS.  Even if the appeal to CAS would constitute a, legally doubtful, recognition of its competence to deal with the doping sanction, it would not entail that this recognition extends to every potential other dispute between the parties.

121 - Moreover, it has not been demonstrated by the ISU, nor is it clearly understandable, why, based on good faith, it could legitimately rely on the expectation that Pechstein would refer other disputes to CAS. Indeed, the fact that the arbitral convention underlying CAS competence is the result of an abuse of a dominant position by the ISU speaks out against any such legitimate expectations.

122 - 4. The fact that Pechstein signed, in the framework of the arbitral procedure involving her doping sanction, the Order of Procedure from the 29 September 2009, does not constitute an arbitration clause barring access to the ordinary courts, as it was in any case only referring to the specific dispute before CAS. Thus, it cannot constitute a valid arbitration agreement covering other disputes.

123 - III. Pechstein’s complaint is partially admissible. […]

124 – 128 Omitted

129 - B. As far as the complaint is admissible it is not yet ready for decision. Contrary to the view of the first instance court, the complaint cannot be discarded on the basis of the res judicata effect of the CAS award.

130 - I. It is true that the procedural relevance of a foreign arbitral awards, in particular its res judicata effect, does not necessitate a particular recognition process; but, this implies that the fundamental conditions for the recognition be fulfilled, which is not the case in the present instance.

131 - II. The recognition of the CAS award – which would anyway only be possible if CAS would constitute a proper arbitral tribunal – would go contrary to the public order. Consequently, the CAS award cannot be recognized due to § 1061 Abs. 1 Satz 1 ZPO in relation with Art. V par. 2. b) of the New York Convention on the recognition and enforcement of foreign arbitral awards from the 10^th June 1958.

132 - 1. An arbitral award violates the ordre public, and is thus not recognizable, when it leads to an outcome that is obviously incompatible with the fundamental principles of German law, and therefore breaches the prime foundations of the German legal order. However, not any decision potentially contrary to German mandatory laws constitutes a violation of the ordre public. 

133 - Fundamental provisions of competition law are part of the ordre public exception to the recognition of arbitral awards in the sense of Art. 5 par.2 b) New York Convention (CJEU, 4 June 2009, C-8/08 - T-Mobile Netherlands BV u.a./Raad van hestuur van de Nederlandse Mededingingsautoriteit; CJEU, 13. July 2006 - C-295-298/04 - Vincenzo Manfredi/Lloyd Adriatico Assicurazioni SpA;  CJEU 1. June 1999 - C-126/97 - Eco Swiss China Time Ltd/Benetton International; [...])

134 - 2. Thus the CAS award cannot be recognized

135 - a) In the present case the ISU was barred by § 19 Abs. 1, Abs. 4 Nr. 2 GWB from imposing the arbitration agreement onto Pechstein. The recognition of an award based on an agreement contrary to competition law would perpetuate the abusive conduct of the ISU, which would be contrary to the objective underlying the ban on abusive practices imposed by the competition rules. This is further confirmed by the fact that Pechstein disposes, on the basis of § 33 Abs. 1 Satz 1 GWB, of a right to require the ISU to remedy the consequences of the forced arbitration clause. This includes the fact that the ISU cannot rely on the CAS award issues on the basis of this arbitration agreement.

136 - Omitted

137 - b) The question whether with Pechstein’s appeal to CAS or her signing of the Order of Procedure a new arbitration agreement was concluded can stay unanswered.  Indeed, this would also constitute a perpetuation of the abuse of a dominant position by the ISU. Pechstein had no other credible option available to obtain the right to participate to the Winter Olympics taking place between the 12 and 28 February 2010 in Vancouver, but to appeal to CAS on the basis of the arbitral agreement of the 2 January 2009.  A recourse to the Swiss courts was in light of their jurisprudence, as confirmed later by the ruling of the Swiss Federal tribunal on the CAS award, not particularly promising. Similarly, a request for an order to be authorised to participate to the Olympics in front of the German courts can hardly be deemed a reliable alternative mean due to the uncertainties related to the assessment of their international competence in that matter.

138 - III. Due to the impossibility to recognize the CAS award, German Courts are not bound by its findings in their evaluation of the legality of the doping sanction in order to assess the legitimacy of Pechstein’s damage claims. 

[1] The concept of « Ein-Platz-Prinzip » is specific to German law and qualifies the fact that sports associations are monopolists by nature.