European General Court confirms that recourse to CAS arbitration under sports federation statutes does not compromise the full effectiveness of EU (competition) law

Europe

In its judgment of 16 December 2020, the European General Court decides that the European Commission was not entitled to consider that the arbitration rules of the International Skating Union (ISU), which confer exclusive jurisdiction on the Court of Arbitration for Sport (CAS) to hear appeals against ineligibility decisions, constituted an aggravating circumstance. According to the General Court, the Commission was therefore not entitled to conclude that the ISU’s arbitration rules reinforced the restrictions of competition created by the ISU’s eligibility rules, and was also wrong to require the ISU to amend the said arbitration rules.

In 2014, the European Commission received a complaint lodged by two professional speed skaters (Mark Tuitert and Niels Kerstholt) alleging that the eligibility rules of the International Skating Union (ISU) were incompatible with Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU).

 

In its decision of 8 December 2017, the Commission decided that the ISU’s eligibility rules were incompatible with Article 101 TFEU, in so far as their object was to restrict the possibilities for professional speed skaters to take part freely in international events organised by third parties and, therefore, they deprived those third parties of the services of athletes needed to organise such competitions. The Commission therefore required the ISU, subject to a periodic penalty payment, to put an end to the infringement (by abolishing or modifying its eligibility rules), without, however, imposing any fine.

 

In its decision, the Commission considered also that the ISU’s arbitration rules – which confer on the Court of Arbitration for Sport (CAS) in Switzerland exclusive jurisdiction to hear appeals against ineligibility decisions and make such arbitration binding – constituted an aggravating circumstance and that they therefore reinforced the restrictions of competition caused by the eligibility rules. That conclusion was based on the fact that, in the Commission’s view, athletes were required to accept the arbitration rules and the exclusive jurisdiction of the CAS, and that the arbitration rules made it difficult to obtain effective judicial protection against any ineligibility decisions of the applicant that are contrary to Article 101 TFEU.

 

The ISU brought an action for annulment against the decision of the Commission before the General Court of the European Union.

 

In its judgment of 16 December 2020 (T93/18), the General Court confirms that the classification of a restriction of competition by object established by the Commission in respect of the ISU’s eligibility rules is well founded, but partially annuls the decision of the Commission in respect of the corrective measures imposed on the ISU, in so far as the Commission required substantial modifications of the ISU’s arbitration rules in the event that the pre-authorisation system was retained.


More specifically, the General Court points out that “the fact that the arbitration rules conferred on the CAS exclusive jurisdiction to review the legality of ineligibility decisions and that the arbitration in the present case is binding do not constitute unlawful circumstances which make the infringement found in the present case more harmful, as the circumstances listed within the meaning of point 28 of the 2006 Guidelines do. Accordingly, the Commission was not entitled to consider that the arbitration rules constituted an aggravating circumstance and therefore, it was not entitled to conclude that they reinforced the restrictions of competition created by the eligibility rules” (para 163).

 

The grounds of the judgment are clearly favourable to recourse to CAS arbitration in sports matters.

 

Firstly, “it should be noted […] as the Commission acknowledges in recital 269 of the contested decision, that arbitration is a generally accepted method of binding dispute resolution and that agreeing on an arbitration clause as such does not restrict competition” (para 154).

 

Secondly, “it must be held that the Commission did not consider that the applicant’s arbitration rules infringed athletes’ right to a fair hearing” (para 155).

 

Thirdly, “it should be noted that the binding nature of arbitration and the fact that the arbitration rules confer exclusive jurisdiction on the CAS to hear disputes relating to decisions on ineligibility made by the applicant may be justified by legitimate interests linked to the specific nature of the sport. In that regard, it should be noted that the European Court of Human Rights has ruled to that effect in a case which concerned, inter alia, the arbitration rules. It recognised that it was clearly in the interest of disputes arising in the context of professional sport, in particular those involving an international dimension, that they could be submitted to a specialised court which is capable of adjudicating quickly and economically. It added that high-level international sporting events are organised in different countries by organisations having their seat in different States, and that they are often open to athletes throughout the world. In that context, recourse to a single, specialised international arbitral tribunal facilitates a certain procedural uniformity and strengthens legal certainty (ECtHR, 2 October 2018, Mutu and Pechstein v. Switzerland, CE:ECHR:2018:1002JUD004057510, § 98)” (para 156).

 

Fourthly, the General Court expressly points out that “use of the CAS arbitration system is not such as to compromise the full effectiveness of EU competition law” (para 161), for the following reasons.

 

On the one hand, “it must be borne in mind that the Court of Justice has already held that any person is entitled to bring proceedings before a national court and claim compensation for the harm suffered where there is a causal link between that harm and an agreement or practice prohibited under Article 101 TFEU” (para 157).

 

Thus, according to the General Court, “while it is true that the arbitration rules do not permit skaters to bring an action before a national court for annulment of an ineligibility decision which infringes Article 101(1) TFEU, the fact remains that skaters may bring, if they so wish […], an action for damages before a national court. Furthermore, organisers who are third parties may also bring an action for damages where they consider that a decision refusing authorisation infringes Article 101(1) TFEU. In such cases, the national court is not bound by the CAS’s assessment of the compatibility of the ineligibility decision or the refusal of authorisation with EU competition law and, where appropriate, may submit a request for a preliminary ruling to the Court of Justice under Article 267 TFEU” (para 159).

 

On the other hand, “it should be noted that skaters and third-party organisers who have been the subject of an ineligibility decision or a refusal to grant authorisation contrary to Article 101(1) TFEU may also lodge a complaint with a national competition authority or the Commission, as the complainants have done in the present case. In the event that the authority dealing with the case had to make a decision, that decision could further, if necessary, be reviewed before the EU Courts. The EU Courts could find it necessary to rule on such a matter in the context of an action for annulment brought against a Commission decision or following a reference for a preliminary ruling made by a national court hearing an action brought against a decision of a national competition authority” (para 160).

 

Finally, the General Court clearly distinguishes recourse to CAS arbitration in sports matters from the forced investment arbitration at issue in the Achmea judgment of 6 March 2018: “The case-law relied on by the Commission cannot cast doubt on that conclusion. Unlike the circumstances at issue in the case giving rise to the judgment of 6 March 2018, Achmea (C284/16, EU:C:2018:158, paragraph 55), the establishment of the CAS does not derive from a treaty by which Member States agreed to remove from the jurisdiction of their own courts and, therefore, from the system of judicial remedies which the second subparagraph of Article 19(1) TEU requires them to establish in the fields covered by EU law, disputes which may concern the application or interpretation of competition law” (para 162).

In conclusion, the judgment of the General Court constitutes an additional and important milestone confirming the validity of the recourse to CAS arbitration provided for in the statutes of sports federations and its conformity with the right to a fair trial and the right to effective judicial protection, in the same vein as the Mutu and Pechstein ruling of 2 October 2018 by the European Court of Human Rights.