A case of interest for sports and sports arbitrage is currently pending with the Court of Justice of the European Union and is subject to an analysis of the Costaș, Negru & Asociații team in this article.
The pending case C-600/23, Royal Football Club Seraing, which is at the stage of the conclusions of the Advocate General, addresses an issue that transcends sport and addresses notions of procedural law, but also notions specific to the free movement of Union citizens.
The facts which have led to the preliminary question referred to the European Court of Justice are as follows: Royal Football Club Seraing, a Belgian law association which guides Seraing football club, affiliated with the Belgian Regal Football Association, has concluded two agreements in 2015 with the Maltese company Doyen Sports Investment Limited. These agreements regarded the financing of the football club, in exchange of economic rights over football players, the beneficiary of these rights being Doyen Sports.
We would like to point out the Fédération Internationale de Football Association (FIFA), an organisation established in Switzerland, reunites the associations and football clubs at an international level, while also having the role of the main regulator in the field of regulations in football. Hence, each football club which is part of this associations is liable for applying the compulsory provisions regulated by FIFA.
The new regulations which were adopted at the end of 2014 by the Executive Committee of FIFA establish an absolute interdiction for third parties to own economic rights over football players and an interdiction to conclude third party ownership (TPO) agreements. As a result of these new rules, Royal Football Club Searing has been sanctioned by FIFA’s Disciplinary Committee for violating the TPO ban, following agreements made in 2015 with Doyen Sports. This sanctioning decision was subsequently appealed to the CAS (Court of Arbitration for Sport) and subsequently by an action for annulment brought by the Belgian football club before the Swiss Federal Supreme Court. The sanctioning decision was confirmed by both jurisdictional bodies.
In order to challenge the validity and legality of FIFA’s new rules in the light of the provisions of the Union, Doyen Sports brought an action against FIFA, UEFA and URBSFA before the Belgian courts, in which the Royal Football Club Seraing also intervened. Subsequently, the Brussels Court of Appeal held that it could not rule on the question referred to it by Doyen because Belgian national law recognizes the res judicata effect of arbitral awards without the need for an additional exequatur procedure. It considers that the judgment of the CAS became final by judgment of the Federal Supreme Court of Switzerland following the dismissal of the action for annulment. According to the Code de droit international privé, any foreign judgment which is enforceable in the State in which it was given is automatically recognized in Belgium without any procedure.
As a consequence, the Belgian Court of Cassation, which was subsequently seized of the matter, pointed out that, because of the national provisions which provide for the expert recognition of arbitral awards, it was prevented from examining the conformity of the FIFA regulations with the provisions of the Union, in the light of the contested sanctioning decision. Accordingly, the Belgian Supreme Court adjourned the case in order to address the following preliminary question: to what extent do the Belgian provisions on the recognition of arbitral awards preclude Union provisions which allow preliminary questions to be referred to Union courts if the judgment has been reviewed for conformity by a court of a non-member State?
In both proceedings, the applicants, although they raised criticisms of infringement of Union rights relating to freedom of movement, encountered a legal deadlock before the Belgian courts, owing to national provisions which, at least on the face of it, do not allow them to have access to the effective judicial protection guaranteed by the TEU and the TFEU. Advocate General Tamara Capeta answered the question referred in the affirmative.
In order to understand the procedural rigors that this question imposes, it must be borne in mind that, in jurisdictional matters, FIFA’s statutes establish exclusive and binding jurisdiction in favor of the Court of Arbitration for Sport. However, the only court of ordinary law authorized to review CAS decisions is the Swiss Federal Supreme Court, and as has been recognized in other cases, such as ECHR case of Semenya v. Switzerland, the grounds for review are extremely limited. Both the Royal Football Club Seraing and Doyen Sports, as well as FIFA, UEFA and URBSFA have relied on the case law of the European Court of Justice on its view on arbitration.
In support of FIFA, UEFA and URBSFA pleas judgements in both Nordsee and EcoSwiss cases were put forward. In these cases, the Court of Justice of the European Union accepted that it is possible to review arbitral awards at various stages before the courts of the Member States, which will then be able to refer to the Court of Justice the possibility of infringement of provisions of Union law. In addition, the Court ruled in case EcoSwiss that it is possible to limit judicial review of such awards precisely in view of the effectiveness of the arbitration procedure. The Court thus recognizes the compatibility of national rules which limit judicial review of arbitral awards to reasons of public policy. Although no enlightening criteria have been established for this notion of public policy, it is important to note from these judgments that the Court has previously recognized that the scope of judicial review of arbitral awards may be limited.
However, these judgments deal with the situation of voluntary arbitration clauses, whereas the FIFA Statutes provide for the exclusivity and mandatory nature of the arbitration procedure before CAS. At the same time, the Advocate General has also referred to the autonomy of the enforcement procedure of the dispute resolution system generated by the FIFA Statute. In ‘ordinary’ commercial arbitration, the enforceability of an arbitral award is subject to a preliminary procedure before the national courts of the member states, whereas in the event of a refusal to enforce a CAS award, FIFA may itself take the enforcement steps (as in the present case, where the Disciplinary Committee directly imposed the sanction on the Belgian football club). It is clear that, as long as a body is empowered to enforce an arbitral award on its own, in the absence of the involvement of the courts of the Member States, it is unlikely that the question whether an arbitral award is compatible with Union law will be subject to judicial review.
On the other hand, the Advocate General considered that neither the Achmea case relied on by Royal Football Club Seraing and Doyen Sports is not applicable in the present case, since it is in principle addressed to the Member States. Both the system of arbitration and the binding and exclusive jurisdiction of the CAS are matters which are regulated at the level of a private organization, namely FIFA, and are therefore applicable to all its members, as a result of joining this organization.
In view of the specific nature of the problem, namely the obligation of arbitration clauses in favor of the CAS for football clubs and the possibility of enforcing CAS decisions without the need for the assistance of the courts, the need to issue an interpretation applicable to sports arbitration has arisen. This invitation to issue its own interpretation is also motivated by the need to maintain the voluntarily accepted commercial arbitration system in its present form.
Examining the access to the courts of the subjects of CAS rulings, FIFA considered that the arbitration system it uses is indeed binding, but that it is not necessary to set up a new mechanism of judicial review of such rulings to verify whether either FIFA rules or CAS rulings violate Union rules. FIFA, during the discussions at the meeting, mentioned that indirect action, like an action for damages, is sufficient. However the Advocate General indicates that the European Court should apply the reasoning set out in International Skating Union case. Thus in International Skating Union, the European Court emphasized the need for judicial review all the more so in the case of arbitration imposed on sports organizations and players, and the fact that the possibility of compensation for any alleged damage is assured is not a method of supplementing any possible appeal against the judgment complained of.
The Advocate General concludes that it is necessary to ensure effective judicial protection by providing a means of review and, where appropriate, of preventing FIFA rules which are contrary to Union law. Such an arbitral award cannot, however, prevent the national court from reviewing it, if necessary, by means of the preliminary question mechanism.
With regard to the scope of such judicial review, we note that, although in commercial arbitration the possibility of limiting such review to grounds of public policy is recognized, the Advocate General considers that in the present case, in relation to the mandatory nature of sports arbitration, the same limitation is no longer justified. The significant difference between the two systems of arbitration lies in the voluntary and binding nature of those procedures. Thus as long as two contracting parties agree to conclude an arbitration agreement, it is easy to understand that the parties have exempted the application of the rules of a legal system, with the exception of public policy. The same reasons which could justify the limitation of control in commercial arbitration cannot apply mutatis mutandis to sports arbitration. The Advocate General accepts that the national courts must be able to review the FIFA rules as to their compatibility with the rules of the Union, irrespective of the manner in which they have come to exercise review and irrespective of any contrary decision of the CAS.
In analyzing the applicability of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, it is accepted that it is applicable in this case, but the interpretation offered by the Advocate General is that the public policy grounds for allowing judicial review can also be subsumed under the provision of effective jurisdictional protection by the European courts.
The Advocate General considers in his preliminary conclusions that the rules of Union law are contrary to Belgian national law, in particular the Code de droit international privé, and that the invocation of res judicata of a CAS judgment in those circumstances has the potential to affect the judicial protection afforded to Union citizens. In the matter of sports arbitration, as the Advocate General has ruled, a separate interpretation is required, different from the approach which the Court has taken to commercial arbitration. The mandatory nature of the arbitration system imposed by FIFA in the present case must not result in the Union courts being prevented from carrying out the review, since a contrary reasoning could lead to the future impossibility of examining the compatibility of the FIFA rules and the Union rules themselves.
This article has been prepared for the blog of Costaș, Negru & Asociații, by Ms. Diana Hoha Pop from Arad Bar Association.
Costaș, Negru & Asociații is a civil society of lawyers with offices in Cluj-Napoca, Bucharest and Arad, which offers assistance, legal representation and consultancy in several areas of practice through a team composed of 18 lawyers and consultants. Details regarding legal services and team composition can be found on the website https://www.costas-negru.ro. All rights for the materials published on the company’s website and through social networks belong to Costaș, Negru & Asociații, their reproduction being permitted only for informational purposes and with correct and complete citation of the source.
