Skating on Thin Ice: CAS & the Enforcement of its Awards

The recent outcome reached by the Higher Regional Court of Munich in the Claudia Pechstein matter, illustrates the procedural and jurisdictional problems associated with the issue of self-regulation in sport. It also serves as a clear indicator of the fine and delicate balance between external regulation and self-regulation in sport.

Recently, the German court held that the Award delivered by the Court of Arbitration for Sport (CAS), which upheld a doping ban against the applicant Claudia Pechstein, was not enforceable in Germany, as the arbitration agreement between Pechstein and her sporting governing body (ISU), was in violation of German anti-trust laws and it was, therefore, invalid. The court also concluded that it is competent to rule on the EUR 4m compensation claim against the ISU. The ISU has indicated that it will appeal to the German Federal Court, whose decision will be final and binding. If the Federal Court decides to upheld the Regional Court's decision, such decision would have far-reaching consequences for the enforcement of CAS awards in national jurisdictions. It would also seriously affect CAS' jurisdiction in terms of the several arbitration agreements between stakeholders in different sports.

The court produced two important findings. In the first finding, the court explained that the ISU holds a monopoly in the market of international ice speed skating competitions. In the premises, the court held that the ISU is deemed to have a dominant market position, for the purposes of the German Law against Restraints on Competition. According to this law, a company that has a dominant market position is prohibited from requiring the other party to agree to provisions that deviate from those that would likely prevail in case of a functioning competitive environment. This, the court held, was against public policy.

In the second finding, the court raised issues of neutrality and independence, with regards to procedure before CAS. Although the German court recognised the necessity of the operation of CAS, with regards to the conclusion of arbitration agreements and decisions based on such agreements, the court also found that because of the specific procedural rules applicable in CAS arbitration, the sports federations have a decisive and predominant influence on the selection of the individuals who can be chosen as arbitrators. The court's finding on this point was that CAS procedure with regards to the selection and appointment of arbitrators may not be neutral and thus may have an effect on the issues of impartiality and independence.

Finally, the German court delivered a serious blow to the enforcement of the CAS' award against Pechstein, as it held that current German anti-trust laws prohibit ISU from forcing Pechstein to agree to the arbitration agreement. As anti-trust laws are part of public policy, to accept the enforcement of a CAS award would mean violation not only of German anti-trust laws (and consequently abuse of the ISU's dominant position in the market), but effectively, violation of German public policy.

It follows that the outcome of this important legal matter will determine not only the future of the relationship between athletes and sporting governing bodies, but more importantly, the future of CAS as the supreme court in sport. The undersigned is of the view that CAS' importance cannot be underestimated, not only because of the expertise it produces with regards to complex sporting issues, but also in terms of its process which is quick and flexible. As the undersigned has stated in a recent interview with the BBC (http://www.bbc.co.uk/sport/0/31447368), CAS must not be dismissed as the final and supreme arbiter on sports law issues. Instead, CAS must reform itself and become better, for the benefit of sport and those who seek justice.

Dr. Gregory Ioannidis, 6 March 2015.