Switzerland: The Pechstein Decision – The End Of Sports Jurisdiction As We Know It?

Last Updated: 29 April 2015
Article by Lucien W. Valloni

When the Oberlandesgericht Munich (Higher Regional Court) announced its decision in the Pechstein case on 15 January 2015, the well-established pyramid of sports jurisdiction with the Court of Arbitration for Sport (CAS) in Lausanne at its peak was shaking. Could this decision bring about the end of sports jurisdiction as we know it?

Claudia Pechstein and the Courts The Oberlandesgericht decided to allow Pechstein's claim against the International Skating Union (ISU); the first win for the 42-year old speed skating Olympic Gold Medalist and World Champion in her ongoing legal odyssey against a doping ban in 2009. Pechstein always protested her innocence, and doctors later diagnosed her with a genetic defect explaining the test results.

At the 2009 World Speed Skating Championships, Pechstein was tested positive for doping and subsequently banned from all ISU competitions for two years. She contested that ban before a tribunal of the CAS based on an arbitration clause in the registration form of the World Championships but lost the case (CAS 2009/A/1912 & 1913 and CAS OG 10/04). Pechstein contested that award twice in front of the Swiss Federal Court (BGer 4A_612/2009 & 4A_144/2010)*, but without success. Whilst there is currently a complaint pending before the European Court of Human Rights against the decisions of the Federal Court (pending case 67474/10, Pechstein c. Suisse), Pechstein also took the matter to the Landesgericht Munich (Regional Court) and claimed damages from the ISU.

The Landesgericht rejected Pechstein's claims based on the res iudicata principle with respect to the CAS award. The Oberlandesgericht has now overturned that decision and allowed Pechstein's claim for damages in an interim decision. The Court considered the arbitration agreement between Pechstein and the ISU to be contrary to mandatory German (and maybe European) competition law and therefore a violation of the ordre public.

The Decision of the Oberlandesgericht Munich The decision of the Oberlandesgericht is straightforward and well-argued. The Judges start off by pointing out a fact about international sports federations: they are monopolists. German doctrine refers to this as the Ein- Platz-Prinzip, which stipulates that in each sport there can be only one federation per geographical level. At least in speed skating, if an athlete wants to make a living from this sport, there is no alternative to the international competitions organised by the governing bodies. This puts the ISU, organiser of the World Speed Skating Championships, in a dominant position pursuant to the German Act against Restraints of Competition. If athletes want to compete at an international level, they have no other choice but to put up with an arbitration clause that the organising federations include in their registration forms. Having athletes sign a compulsory arbitration agreement is not per se an abuse of a dominant position because there are good reasons for such an agreement. The Court held, however, that the problem lies in a structural imbalance of the CAS. In 2009, when Pechstein signed the arbitration agreement, the CAS Code then in force provided that 3 out of 5 arbitrators were chosen by the sport's governing bodies, with only two among those persons independent from those bodies. Furthermore, the court noted that in disputes in which the parties don't agree on a name, the president of an arbitral tribunal is directly nominated by the president of the CAS Appeals Division, who is himself nominated by the International Council of Arbitration for Sport (ICAS), a body highly dependent on sports associations. Forcing an athlete to accept an imbalanced arbitral court's jurisdiction is what constitutes an abuse of market power (and not the arbitration agreement itself).

Accordingly, the Oberlandesgericht refused to recognise the CAS award based on Art. V (2) (b) New York Convention because it violates German cartel law, which is part of the ordre public. Hence, no res iudicata effect of the CAS award hinders Pechstein from bringing forward claims for damages before German state courts.

To sum up, the Oberlandesgericht Munich held that the arbitration agreement was void and the arbitral award could not be recognized.

The decision is currently under appeal to the German Bundesgerichtshof (Federal Supreme Court).

Towards a CAS Reform

The Oberlandesgericht's decision is not one against sports arbitration in general, quite the contrary. However it reveals some apparent flaws in the CAS set up that need to be addressed. This decision could also potentially be used as a blueprint for other cases in which an athlete does not want to accept a CAS decision in any part of the world, or wants to sue a federation for damages.

Thus, to answer the question from the beginning of this paper, the system of sports arbitration will stay in place, which is a good thing for achieving harmonisation in sports law. However, the ICAS/CAS will have to undergo an internal restructuring and to sit together with all stakeholders to find an acceptable well balanced solution. World unions especially of the different sports should have a direct and equal say in respect of ICAS/ CAS rules involving athletes and the nomination and composition of the CAS list of arbitrators. Furthermore, a mechanism has to be found for the nomination of the president of each arbitration panel in order to guarantee independence.

* Claudia Pechstein was represented in these proceedings before the Swiss Federal Supreme Court by Dr. Lucien W. Valloni.

Originally published March 2015.

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