Sport and Arbitration: the ideal doubles pairing?

Arbitration is an established dispute resolution mechanism in the sports arena. Arbitration clauses are now common-place, even standard, in the contracts of major sports clubs and the rules of governing bodies. However, the rules of sporting bodies are rarely negotiated in any real sense, arguably leaving athletes with little option but to accept the arbitration clause.

In this article, we consider the advantages of arbitration in sport and the tensions that arise from “forced” arbitration clauses.

Advantages of arbitration clauses in sport

Speed & flexibility

The most significant feature of arbitration from a sports perspective is the potential swiftness and flexibility of its process. Sports disputes are invariably time-pressured – for example, issues concerning eligibility can arise on the eve of a competition and disqualification disputes will impact results. The strict competition timetables and short career spans of athletes leave parties unwilling and, in some cases, unable to wait months (or years) before a dispute is resolved.

Timely decisions are therefore invaluable. By way of example, the Russian athletes' appeal against the International Olympic Committee's decision not to invite them as neutral competitors to the 2018 PyeongChang Winter Olympics was resolved by the Court of Arbitration for Sport (CAS) just three days after the appeal was filed. And perhaps the clearest example of the potential speed of sports arbitration is the operation of the CAS Ad Hoc Division. Activated only for specific international sporting events (including the Olympics, the Commonwealth Games and the FIFA World Cup), a panel of CAS-appointed arbitrators are available on-site to deliver awards within 24 hours of the lodging of an application for arbitration.

The flexibility typically baked into the arbitral rules chosen for these purposes also allows procedures to be tailored to the needs of the particular dispute.

Choice of arbitrators

Sport has evolved into an international, cross-jurisdictional business with sophisticated commercial contracts.

Parties will therefore appreciate their ability to appoint a tribunal with expertise relevant to the particular dispute, including a specific understanding of the regulation, governance and technical issues arising in the course of the sport in question. Such experts are also more likely to be sensitive to the tensions at play in the context of the dispute, as well as being able to get on top of a dispute quickly, contributing to the efficacy of the process.

Confidentiality & privacy

Sports disputes tend to attract intense media scrutiny, particularly headline-grabbing issues relating to eligibility and doping. Where careers and reputations are at stake, the privacy and confidentiality of arbitral proceedings is key.

Parties to the arbitration and the tribunal will be under duties to maintain confidentiality: the hearing will be held in private (unless agreed otherwise), documents generated and disclosed during or for the purpose of the arbitral proceedings must be kept confidential and, subject to some exceptions, the award should not become public (even if the outcome often has to be). The mere fact a party is even involved in arbitral proceedings can also be kept confidential.

This is in contrast to court proceedings, where non-parties can obtain access to statements of case, many judgments are publicly available, and trials are often open to members of the public and the press.

Finality

It is common for arbitration clauses (or the rules incorporated by such clauses) to provide that the award will be final and binding on the parties, thereby limiting the options for challenging an award. The finality of an arbitral award, particularly as compared to a court judgment which can be subject to appeal(s), can be especially important where there is a need for all parties to move on with the sporting competition or career in question.

The relative ease of enforcing arbitral awards abroad is particularly significant, given the global nature of sports disputes. The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958), to which there are currently 166 contracting state parties, provides an extensive, streamlined enforcement regime for international arbitration awards. There is no equivalent for the global enforcement of traditional court judgments.

“Forced” arbitration clauses: red card all round?

The question of whether arbitration clauses are “forced” in the world of sport has been raised in a line of recent cases. The issues raised relate to validity and to tensions with the right to “a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law” under Article 6(1) of the European Convention on Human Rights (ECHR). To date, for the most part “forced” arbitration clauses have been considered to be on the right side of the line:

Stretford v The FA

The Civil Court of Appeal in England (CA) determined that Rule K (Arbitration) of the FA Rules was not in conflict with Article 6(1) ECHR. Indeed, the CA concluded that, as a matter of English law, the requirements under Article 6(1) ECHR could be waived providing the party had voluntarily entered into an arbitration agreement and had not entered into it as a result of duress, undue influence or mistake, or the terms were so onerous or unusual that they should have been brought to the party's attention, but were not.

Notably, the court recognised that arbitration clauses have become “standard” in the rules of sporting organisations and that to strike down such clauses would have far-reaching and undesirable effects on the use of arbitration in sport.

Mutu and Pechstein v Switzerland

• The Pechstein case has been considered one of the most significant sports law judgments of recent times. As part of its decision, the European Court of Human Rights (ECtHR) considered whether the human rights of Claudia Pechstein, a professional speed skater, had been violated under Article 6(1) ECHR on the basis of: (1) CAS’s alleged lack of independence; and (2) the procedure employed to decide the outcome of the case by CAS, specifically in relation to the lack of a public hearing.
• Firstly, the ECtHR had to decide whether Claudia Pechstein had waived her rights under Article 6(1) ECHR by consenting to an arbitration clause under the International Skating Unions (ISU) Rules. The ECtHR distinguished between “voluntary” and “forced” arbitration clauses, noting that arbitration clauses in sport are not compulsory per se if the relevant rules allow the athlete to freely and voluntarily consent to an arbitration agreement. As such, it found that a voluntary waiver of ECHR rights shall be valid where it is “free, lawful and unequivocal”. However, taking a slightly different stance to Streford v The FA, the ECtHR held that where such consent has been compelled or “forced”, Article 6(1) ECHR will still be applicable to the arbitration proceedings. The ECtHR found that Pechstein’s consent to the arbitration clause had been forced, since she only had the choice between accepting the clause or rendering herself ineligible to compete professionally.
• Secondly, in determining whether Pechstein’s Article 6(1) ECHR rights had been violated, the ECtHR found that whilst CAS was “an independent and impartial tribunal established by law”, Pechstein’s request for a public hearing had been refused without a justifiable reason and, therefore, her right to a fair trial under Article 6(1) ECHR had been infringed. At the time, the CAS Code of Sports-related Arbitration (CAS Code) provided that hearings would only be conducted in public with the agreement of all parties and the CAS panel refused Pechstein’s request. The ECtHR drew attention to the public character of proceedings as being a fundamental principle of Article 6(1) ECHR. It outlined that holding proceedings in public protects litigants against justice being administered in secret without public scrutiny. In particular, the question of whether Pechstein was justifiably banned for doping and the hearing of expert testimony in that regard rendered it necessary to hold a hearing under public scrutiny. Following this ruling, the CAS Code was amended to allow for a public hearing to be held at the sole request of one of the parties if the dispute is of a disciplinary nature.

The current state-of-play

A German judgment has recently threatened to go above and beyond the previous line of cases. The district court of Frankfurt am Main upheld the damages claim of two professional German beach volleyball players against the German Volleyball Association (DVV) for the DVV’s systematic refusal to nominate the athletes for international beach volleyball tournaments. The German court deemed the arbitration agreement to be invalid for two reasons:

1. The arbitration clause unduly disadvantaged the athletes because of the unequal constitution of the arbitral tribunal. Given that the chairman of the arbitral tribunal was also the president of the DVV’s disciplinary court, the court considered that the DVV could effectively provide for two of its members to be a part of the arbitral tribunal, while the athletes could only appoint one arbitrator out of three. The court also criticised the fact that the arbitration clause did not contain any requirements regarding the legal qualification of the arbitrators, thus allowing a tribunal to be entirely composed of non-lawyers.
2. The court found that the arbitration agreement was “forced” and therefore, in line with specific German case law on fundamental rights, invalid. The court relied on the Pechstein case in applying the presumption that professional athletes do not voluntarily agree to an arbitration clause if the alternative is the prospect of not earning a living within their professional sport. The court further stated that the fact that the athletes had accepted the clause without any discussion or protest did not mean that they had voluntarily accepted it. In the case at hand, the court found that the DVV had not produced any evidence that the athletes were not “forced” to accept the clause, whereas the athletes had substantiated their argument that the arbitration clause was never open for negotiation between the parties. The German district court’s judgment has been appealed.

Comment

The issue of "forced" arbitration clauses is far from settled. Despite the persuasive judgment of the ECtHR in the well-known Pechstein case, discussions on the meaning and validity of "forced” arbitration clauses in sport, including their tensions with Article 6(1) ECHR rights to a fair hearing, have been contested once more in the recent judgment of the district court of Frankfurt am Main. The judgment illustrates the legal uncertainty of the use of arbitration clauses in sport, which is unlikely to be resolved soon. Sports organisations would be well advised to carefully re-consider the drafting of their arbitration clauses, and also to discuss these clauses with athletes (or their representative bodies), to try to limit the scope for criticism that athletes had no choice but to agree to them or that they somehow create an inherent imbalance in the event of any dispute. Despite the lingering ambiguity, sports associations (as well as other major sports stakeholders) are likely to continue to be compelled by the far-reaching advantages of arbitration as a dispute resolution mechanism for sporting disputes.

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