German landmark decision on sports arbitration before CAS

On 7 June 2016 the German Federal Supreme Court ruled that the arbitration agreement between the professional speed skater and five-time Olympic medalist Claudia Pechstein and the International Skating Union (ISU) was valid.

Prior to the speed skating world championship in Norway in 2009, Pechstein had signed a competition entry notification by the ISU, containing an arbitration agreement providing for arbitration before the Court of Arbitration for Sport (CAS). During the world championship an irregular level of reticulocytes (new red blood cells) was found in her blood stream and the ISU banned her from all competitions for two years.

Pechstein challenged her ban before the CAS, arguing that the unusual blood level was the result of a hereditary disorder. The CAS tribunal upheld the ban, finding no evidence for such unusual blood condition. The following attempts by Pechstein in 2010 to have the award set aside by Swiss state courts were not successful.

Prior to the Winter Olympics in 2010 Pechstein attempted to challenge the German Olympic Committee’s decision not to nominate her in new proceedings before the CAS. Her challenge was rejected and Pechstein subsequently turned to German state courts, claiming damages of EUR 4 million, mainly resulting from her loss of income. The first instance rejected her claim. However, the appeal court admitted the claim and declared the arbitration agreement to be invalid. The appeal court held that the ISU as the sole speed skating association abused its market-dominating position and thus violated § 19 of the German Competition Act, by factually forcing Pechstein to conclude the arbitration agreement and to choose an arbitrator from a predetermined closed list.

The Federal Supreme Court now overturned the appeal court’s decision, stating that the arbitration agreement was valid. The court pointed out that although the ISU indeed has a market-dominating position regarding speed skating, it had not abuse its position. Considering and weighing the interests of both parties, the court came to the conclusion that the CAS is a “real” arbitration court. Although the arbitrators have to be chosen from a closed list which has been compiled mainly by representatives of international sports associations and the National Olympic Committees, there is no structural imbalance between the associations and the athletes. The interests of both sides are the same: the global fight against doping.

The athletes are sufficiently protected by the CAS arbitration rules, in particular with regard to the choice of the arbitrators for the given case and the neutrality and impartiality of the arbitrators. Furthermore, following the issuance of an arbitral award the athletes have the possibility to access the Swiss state courts and to appeal against the award. Against this background, the Federal Supreme Court did not see any basis for Pechstein’s claim.

The full judgment is not published yet. Pechstein has already announced that she will be fil-ing a complaint to the German Federal Constitutional Court. Furthermore, another claim is currently pending before the European Court of Human Rights.