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.
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 19th 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 10th 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.