Sports Arbitration: Weighing Proceedings before CAS V. Standard Commercial Arbitration Institutions

Arbitration has become indispensable for the effective and expeditious resolution of disputes in the sports arena and its use has grown and continues to grow in parallel with the growth of sports activities worldwide.

Since the establishment of the Court of Arbitration for Sport (“CAS”) in 1984, sports arbitration has developed into a specialized body of law, with fairly unique rules and procedures, and a rapidly growing number of cases. This has covered disciplinary disputes and sports-related disputes such as sponsorship agreements, partnership agreements, transfer of players, IP rights and broadcasting agreements.

The CAS has its own set of procedural rules “Code of Sports-related Arbitration and Mediation Rules” (the “CAS Code”), which was amended several times over the past 40 years. The CAS Code is divided into two main sections. The first part sets out the statutes of the International Council of Arbitration for Sport (the “ICAS”) and CAS (Articles S1–S26); whereas the second part contains the Procedural Rules (Articles R27–R70).

In practice, there are several factors to look at when it comes to an efficient dispute resolution mechanism, these factors include Procedural Efficiency; Specialized Expertise; Transparency; and Affordability.

When digging deeper into the legal framework of the CAS, it is evident from CAS Code that it distinguishes between the disciplinary aspects of sports arbitration as it is subject to the Appeal Arbitration Procedure (Articles R47-R59) and Sports-related Arbitration which is governed under Ordinary Arbitration Procedure (Articles R38-R46).

That said, the purpose of this article is to embark on Sports-related commercial disputes and assess whether it shall be considered efficient that such disputes be settled before the CAS – as the case in disciplinary sports arbitration – or that other standard international commercial arbitration venues shall be deemed more fit to settle such disputes given the hybrid nature of Sports-related commercial disputes.

Accordingly, it is important to examine proceedings before CAS in sports-related commercial disputes as opposed to proceedings before standard commercial arbitration venues (e.g. LCIA, ICC, CRCICA, DIAC). This comparison stems from the fact that sports-related commercial disputes are in essence legal disputes pertaining to contractual breach (i.e. failure of a contracting party to fulfil certain contractual obligations), unlike disciplinary sports arbitration (i.e. challenging a sports regulatory body decision) which enjoys special characteristics making CAS particularly well known as “sport’s ultimate umpire” to settle such disputes.

Differences in proceedings before CAS and standard commercial Arbitration institutions:

Seat of Arbitration

The place where arbitration is held has significant legal implications. It affects the procedural laws that govern the arbitration process, the setting aside of an arbitration award, the validity of the arbitration agreement, and the “nationality” of the award and its enforceability since the “nationality” of the award determines whether the award can be recognized in other countries under the New York Convention.

While most Arbitration institutions provide in their rules that the parties have the freedom to decide on the seat of arbitral proceedings and if such agreement is absent the tribunal shall decide the seat, one unique distinction of the CAS system is that, unlike in commercial arbitrations, the parties are deprived of the freedom to choose the seat of arbitration.

All CAS arbitrations are seated in Lausanne, by default, as explicitly provided in Article R28 of the CAS Code: R28 Seat: “The seat of CAS and of each Arbitration Panel (Panel) is Lausanne, Switzerland. However, should circumstances so warrant, and after consultation with all parties, the President of the Panel may decide to hold a hearing in another place and may issue the appropriate directions related to such hearing.”

The default seat of arbitration has important legal implications, as it gives effect to the exclusive jurisdiction of the Swiss Federal Tribunal when a party wants to have a CAS award set aside. Furthermore, it may be noticed here that the rules of commercial arbitration institutions may be deemed more flexible than CAS rules regarding determining the seat of arbitration.

Appointment of Arbitrators

It is unanimously agreed in the rules of commercial arbitration institutions that parties are free to choose arbitrators without the need to abide by a certain list of arbitrators. The flexibility in choosing arbitrators is coherent with the inherent nature of arbitration which depends originally on the free will of the parties.

However, CAS maintains a closed list of arbitrators and provides for the resolution of sports-related disputes through arbitration conducted by Panels composed of one or three arbitrators. According to CAS rules, parties are bound to choose the arbitrators from the aforementioned list. This may be considered beneficial when it comes to sports disciplinary disputes (e.g. athlete challenging a disciplinary decision rendered by a regulatory body) as these types of disputes may require certain experience and expertise and deeper knowledge of various sport rules and regulations.

On the other hand, sports-related commercial disputes (e.g. sponsorship agreements, broadcasting rights contracts) shall be considered purely contractual disputes in its essence pertaining to fulfilment of contractual obligations. Hence, parties may need to appoint arbitrators who are not in CAS’s closed list of arbitrators.

Further to the above, the question of impartiality also maybe raised vis a vis CAS’s list of arbitrators, as the structure of the said list shall be valuated as “weighted heavily in favor of sports federations, which undermines the neutrality of CAS” according to the Higher Regional Court of Munich. (PECHSTEIN V. ISU CASE)

Accordingly, in sports-related commercial arbitrations parties maybe more inclined to resort to arbitration centers other than CAS as their rules grants more flexibility in choosing the arbitrators.

Language of Arbitration

The language of the arbitration has a decisive impact on at least four different aspects of how the proceedings develop, namely (i) party equality, this is, the right for the parties to present their case in a neutral language, (ii) efficiency and the cost of the arbitral proceedings, (iii) the composition of the arbitral tribunal and (iv) the interaction with national courts in the event of annulment or enforcement of the award.

Standard commercial arbitration institutions provide that the arbitration language shall be set according to the agreement of parties. In case of absence of such agreement, some institutions such as the LCIA provides that the language of the arbitration agreement shall prevail and other institutions such as CRCICA stipulate that the tribunal shall decide the arbitration language after taking into consideration several factors such as the nationality of the parties and the language of the arbitration agreement.

On the other hand, CAS rules provides that the arbitration language shall be either French, English or Spanish and parties may request to select another language. However, such request shall be approved first by the arbitration panel. In practice, arbitral panels under CAS have allowed the use of other languages such as Chinese. Still, this remains the absolute discretion of the arbitration panel and not the parties.

In light of the above, it may be concluded that standard commercial arbitration rules provide more flexibility for the parties to set the language of arbitration proceedings unlike CAS rules.

Provisional, Conservatory and Interim Measures

Interim measures are recognized under both the rules of CAS and commercial arbitration institutions. However, the rules of commercial arbitration institutions provide more flexibility to the parties requesting the application of interim and conservatory measures.

Article R 37 of the CAS Code sets out the procedure for seeking provisional or conservatory measures. The applicant seeking preliminary relief must show “irreparable harm, the likelihood of success on the merits of the claim, and whether the interests of the Applicant outweigh those of the Respondents”, which is a standard most arbitration practitioners would be familiar with.

Moreover, CAS rules states that No party may apply for provisional or conservatory measures under these Procedural Rules before all internal legal remedies provided for in the rules of the federation or sports-body concerned have been exhausted. Unlike the rules of commercial arbitration institutions which permits the parties to initiate interim measures proceedings without the need to abide by a certain timeframe nor to fulfil any condition regarding the exhaustion of internal legal remedies.

Confidentiality

It is important to highlight in the beginning the differences between CAS’s Ordinary Arbitration Proceedings and Appeal Proceedings when it comes to the confidentiality of the arbitration proceedings and awards. Awards in sports disciplinary disputes under CAS are commonly published, hence, standing in contrast with one of the key features of arbitration (i.e. confidentiality).

While Ordinary Proceedings are, in general, confidential, and publication of the awards is permitted only if the parties so agree, the principle is reversed in the CAS Appeals Proceedings, as explicitly provided in Article R59 of the CAS Code. Considering that CAS appeals constitute the vast majority of its total caseload, awards are published as a matter of principle. A comprehensive Digest of CAS awards and an online database are publicly available on the CAS Website, providing access to CAS decisions rendered since 1986.

Such publication maybe understandable as it helps promoting greater transparency and consistency between decisions and awards in the sports world. As most CAS awards are publicly available, they are frequently cited by other tribunals, which has led to the emergence of a harmonized body of sports regulation and jurisprudence (known as lex sportive), which sports arbitration users can rely upon.

Concluding remarks and recommendations

Arbitration as a means of dispute resolution had played a key role in the evolution of sports disputes over the years. The dominance of arbitration in the sports field is not limited to sports disciplinary disputes but is extended to sports-related commercial disputes (e.g. sponsorship agreements, transfer of players and broadcasting agreements).

Even though CAS had played an integral role in Sports arbitration and developed it as a separate field of practice in the international arbitration landscape, still resorting to standard commercial arbitration venues may be considered more flexible when it comes to sports-related commercial disputes. This is evidenced from the different standard commercial arbitration rules are providing in relation to the seat, language of arbitration, the appointment of arbitrators and the confidentiality of arbitral awards, which depend originally on the free-will of the parties.