Asser International Sports Law Blog

Our International Sports Law Diary
The Asser International Sports Law Centre is part of the T.M.C. Asser Instituut

The aftermath of the Pechstein ruling: Can the Swiss Federal Tribunal save CAS arbitration? By Thalia Diathesopoulou

It took only days for the de facto immunity of the Court of Arbitration for Sport (CAS) awards from State court interference to collapse like a house of cards on the grounds of the public policy exception mandated under Article V(2)(b) of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards . On 15 January 2015, the Munich Court of Appeals signalled an unprecedented turn in the longstanding legal dispute between the German speed skater, Claudia Pechstein, and the International Skating Union (ISU). It refused to recognise a CAS arbitral award, confirming the validity of a doping ban, on the grounds that it violated a core principle of German cartel law which forms part of the German public policy. A few weeks before, namely on 30 December 2014, the Court of Appeal of Bremen held a CAS award, which ordered the German Club, SV Wilhelmshaven, to pay ‘training compensation’, unenforceable for non-compliance with mandatory European Union law and, thereby, for violation of German ordre public.

Although none of these decisions is yet final, with two red cards in a row, one could presume that the ‘death’ of CAS is closer than ever. Beyond such extreme and rather unconvincing predictions, the two cases set a fundamental precedent: sports arbitration, like all arbitration proceedings, shall abide by minimum standards of institutional impartiality and independence (Pechstein) and apply mandatory EU law (SV Wilhelmshaven).[1] Nevertheless and without prejudice to the need for a potential institutional reform of the CAS (see our analysis here), from a purely international arbitration point of view, the two German courts’ decisions brought into surface the controversial question of the powers of national courts in enforcement proceedings to review CAS arbitral awards with regard to the application of mandatory rules. The Pechstein case illustrates well the potential conflict between two apparently competing policies: the finality of CAS awards and the respect of public policy. In the SV Wilhelmshaven case, the Court went even a step further by implying that sport associations have the ‘duty’ (!) to review a CAS award with regard to its compatibility with German public policy.[2] In view of its uniqueness and complexity, this aspect of the SV Wilhelmshaven case deserves a thorough examination in a future blogpost.

In this blogpost, we will argue that the Pechstein case could be considered as a borderline case with regard to the limits of national courts’ power when scrutinizing CAS awards’ compatibility with domestic public policy. Challenging the validity of CAS awards before national courts, however, is something new under the sun of sports arbitration and could prove fatal for the finality of CAS awards, which is a sine qua non safeguard of procedural equal treatment among athletes[3] and legal coherence in sports law. Should athletes rely on national courts to police the institutional flaws of the CAS? Or is it high time for the Swiss Federal Tribunal (SFT) to abandon the hands-off deferential approach towards CAS arbitration and adopt a broader scope of review in the sporting context?

In this regard, the key claim is the following: national courts’ decisions should not threaten CAS arbitration as long as the Swiss Federal Tribunal review guarantees a minimum quality of CAS arbitrators’ work on the merits.


The Pechstein case: Testing the limits of a national court’s power to review a CAS award

In the latest decision of the Pechstein saga, the Higher Regional Court in Munich found the underlying arbitration agreement between the athlete and ISU in favour of the CAS invalid and that the CAS award issued on the basis of that agreement violated mandatory German cartel law prohibits abusive conduct by companies that have a dominant position on a particular market. The ISU, as sole organizer of speed skating world championship, enjoys a monopolistic position in speed skating and forced the athlete to sign the arbitration agreement at issue. Initially, the Court hold that the arbitration agreement as a prerequisite to the athlete’s participation in competitions does not constitute per se an abuse of a dominant position, since it responds to the specificity of sport and particularly to the need of consistency in sports disputes. However, considering the decisive influence of sports organizations on the selection and appointment of arbitrators under the CAS regulations, the Court concluded that the independence of CAS is questionable. In this light, forcing the athletes to sign an arbitration agreement in favour of a rather dependent and partial tribunal would constitute an abuse of the international sports organizations’ dominant position in the market, thereby infringing the mandatory German antitrust law. More importantly, unlike the First Instance Court, the Higher Regional Court concluded that the res judicata effect of the CAS award does not prevent the athlete from bringing her claim before the Court. Instead, it found  that the recognition of the CAS award would be contrary to Germany’s public policy, since it would perpetuate the abuse of ISU dominant market position.

From a substantive point of view it is evident that the decision primarily concerns the independence of CAS arbitration. However, considering that the Court based its reasoning on the application of German competition law, it could also serve as a model for an abuse of dominant position in the meaning of Article 102 TFEU[4], since the decision provides important insights on the role of a national court in tackling competition law issues at the enforcement stage of an arbitral award. In the Pechstein case, the Court examined the enforcement of a CAS award, which failed to deal with competition law, since the issue was not raised during the arbitral proceedings.[5] Indeed, a competition law issue was never raised before the CAS and neither before the Swiss Federal Tribunal. Interestingly enough, the invalidity of the forced arbitration agreements was raised only in the German courts proceedings.

Given the mandatory nature of competition law, one could argue that if the matter was not raised during the arbitration proceedings by the parties or ex officio by the arbitrators, it could still be considered in enforcement proceedings.[6] However, this approach could hardly be followed in a situation where the applicability of competition law is not prima facie evident and the alleged breach would in no case amount to a hard-core violation of competition law.[7] The answer to this dilemma is to be found in the difficult balance between the public interest in the application and enforcement of competition law on the one hand and the public interest in the finality of CAS arbitral awards on the other. In this light, the following remarks can be made regarding the Pechstein case.

First, it is debatable whether the enforcement of the CAS award results in serious violation of competition law.[8] The Court alleged violation of German cartel law based on the structural imbalance of the CAS and the subsequent challenge of its independence. However, this was rather an examination of the potential effects of the absence of CAS independence which could be hardly interpreted as a hard-core violation of competition law. While the CAS is still “perfectible”[9], the German Court’s decision did not clearly demonstrate to what extent the so-called structural imbalance actually weighted against Pechstein before the CAS. Moreover, one cannot not exclude the possibility that a national court reviewing a CAS awards would be less neutral than the CAS itself as it may have the unconscious intention to safeguard its own athlete.[10] Furthermore, as Nathalia Voser interestigly remarks, the Pechstein ruling failed to provide an assessment of actual excluding and exploitative effects of the forced arbitration clause, in absence of which, it is questionable whether the rules of an arbitral institution could be considered anticompetitive.

Even assuming that the violation of competition law is serious, it is problematic that this issue was raised only in the proceedings before the national courts. The German Court argued that the athlete had no choice but to sign the arbitration agreement and the fact that she never raised a violation of competition law could not justify a perpetuation of the abuse of a dominant position by the ISU.[11] Nevertheless, this argument seems hardly convincing. A refusal of enforcement of an award for failure to apply competition law in the arbitration proceedings, notwithstanding that the party which would have benefited from its application did not raise the issue during the arbitration, could be conceived as an invitation to the parties to behave in bad faith.[12] Had Pechstein won before the CAS, she would not challenge the validity of the arbitration agreement and the Court would not delve into the conformity of the forced arbitration agreement with competition law.

For these reasons, it is the opinion of the author that competition law issues should have been raised in a timely fashion in their proper venue, before the arbitrators. This solution does not entail a danger of systematic violation of competition rules, since the national courts can still protect athletes in case of hard-core violations. On the contrary, treating competition law as a second bite of a cherry for athletes seems to be at odds with the rationale of the public policy exemption and open the road to abusive practices seriously compromising the principle of finality of CAS awards.


The counterbalance? A stricter review of the CAS awards by the Swiss Federal Tribunal (SFT)

In the wake of the Pechstein ruling, it is almost certain that more athletes will resort to national courts to challenge CAS awards aiming to reverse them in their favour and even claim damages against the sports governing bodies imposing sanctions on the basis of these awards. This can lead to a problematic situation as States adopt different standards of protection of fundamental rights of the athletes and arbitration clauses inserted in statutes of international sports federations can potentially conflict with non-Swiss legal systems.[13] Furthermore, it has been demonstrated in this blogpost that a meticulous review of the application of mandatory rules by national courts poses a serious risk for the effectiveness of arbitration without necessarily guaranteeing much better protection of public policy.

In this light, the concentration of jurisdiction at a single forum is an overriding need in order to ensure that the athletes participating in competitions are on equal footing.[14] Nevertheless, this does not come without limits. In view of the ‘forced’ nature of sports arbitration and the specificity of sports disputes, athletes should enjoy further safeguards for their rights. To this end, the Swiss Federal Tribunal (SFT) should play a key role. By adopting a broader and stricter review of the CAS awards, (namely one that would really take into account the forced nature of sports arbitration) the SFT could at the same time safeguard the enforceability of CAS awards and uniform application of sports law at domestic and international level, while guaranteeing athletes’ fundamental rights.

In fact, a CAS award can be challenged before the SFT on the limited grounds provided in Article 190 (2) PILA and particularly: (a) if the sole arbitrator or the arbitral tribunal was not properly appointed or composed; (b) if the arbitral tribunal erroneously held that it had or did not have jurisdiction; (c) if the arbitral tribunal ruled on matters beyond the claims submitted to it or if it failed to rule on one of the claims; (d) if the equality of the parties or their right to be heard in an adversarial proceeding was not respected; or (e) if the award is incompatible with public policy. The current SFT jurisprudence reviewing CAS awards has demonstrated its capacity to protect parties’ procedural rights.[15] Nonetheless, when it comes to the merits of the dispute, the SFT has consistently adopted a hands-off approach by interpreting the concept of incompatibility with public policy under Article 190 (2)(e) very narrowly, covering only those fundamental principles that are widely recognized and should underlie any system of law according to the prevailing conceptions in Switzerland.[16] For example, in practice, this means that the SFT will not consider whether an award is compatible with EU competition law and EU fundamental principles, irrespective of whether such an award could be enforced within the EU, since they are not embedded in Swiss legal tradition.

It was only in 2012 that the SFT for the first time in over twenty years took the bold step to annul a CAS award on the basis of a violation of substantive public policy.[17] In this judgment, the SFT has answered the criticism that its substantive review under Art 190(2) (e) PILA is a dead letter[18] and more importantly it made it clear that the CAS has the primary responsibility of ensuring that its awards are fair on the merits and the SFT’s role is to examine whether the CAS successfully assumed this duty. However, the Matuzalem ruling instead of marking a turning point in the SFT review on the merits, was soon proven to be a rare exception. The repeated ‘excuse’ of the SFT for this pro-CAS arbitration approach has been that Art 190(2) (e) PILA mandates an excessively limited review on the merits. The CAS arbitration being under the sword of Damocles, should this hands-off approach be sustained?

This question has to be answered negatively. In fact, Chapter 12 of the PILA, including Article 190(2), was originally drafted for the purpose of governing international commercial arbitration. Nevertheless, in its almost 20 years of practice, the SFT has acknowledged that sports arbitration should be treated differently than standard commercial arbitration.[19] It could be argued, therefore, that in view of the particularity of sports arbitration, the restrictive reading of substantive public policy under Art 190 (2)(e) could be tolerated in international commercial arbitration, but not for CAS arbitration. It has been suggested, instead, that in view of protecting athletes’ fundamental rights, the SFT should engage in a broader review and take into account the specificity of sports arbitration in defining the scope of its review on the merits of CAS awards.[20] A suggestion has also been made for a redefinition of public policy under which the SFT could freely review whether CAS has complied with the essential rights of athletes.[21] Considering that athletes are forced to accept CAS arbitration, a broader scope of review that would ensure a minimum quality guarantee of the CAS awards on the merits should be offered to athletes. Therefore, a potential institutional reform of the CAS to ensure independence and impartiality coupled with a more stringent review of its awards by the SFT should bring about a more restraint approach of national courts when reviewing CAS awards’ compliance with domestic public policy and ensure the subsequent finality of CAS awards.


[1] B Hess and F Kaps, ‘Claudia Pechstein and SV Wilhelmshaven: Two German Higher Regional Courts Challenge the Court of Arbitration for Sport’ (6 February 2015).

[2] Hanseatisches Oberlandesgericht in Bremen, SV Wilhelmshaven e.V. gegen Norddeutscher Fußball-Verband e.V. (30 Dezember 2014) “i) Der Senat sieht weder sich noch den Beklagten durch die Satzung des Beklagten und die darin in Bezug genommene Satzung des DFB daran gehindert, die Ent-scheidung des Beklagten vom 13.01.2014 unter diesem rechtlichen Aspekt zu prüfen und im Hinblick auf die Unvereinbarkeit der der Vereinsstrafe zugrunde liegenden Festsetzung der Ausbildungsentschädigung mit Art. 45 AEUV die Rechtswidrigkeit des angegriffenen Zwangsabstiegs der ersten Herrenmann-schaft festzustellen. Im Gegenteil war der Beklagte verpflichtet, die „umzuset-zende“ Disziplinarentscheidung und den ihr zugrunde liegenden CAS-Schiedsspruch darauf zu überprüfen, ob diesen nicht zwingendes nationales oder internationales Recht entgegensteht.’’

[3] A Rigozzi, ‘International Sports Arbitration: Why does Swiss Law Matter?’ in Citius, Altius, Fortius-Mélanges en l’ honneur de Denis Oswald (2012), 446.

[4]A Duval, ‘The Pechstein ruling of the Oberlandesgericht München - Time for a new reform of CAS?’ (19 January 2015).

[5] A similar example of this situation is the Eco Swiss v Benetton arbitration, which led to the C-126/97 judgement of the Court of Justice.

[6] L Radicati di Brozolo, ‘Antitrust: a paradigm of the relations between mandatory rules and arbitration-a fresh look at the “second look” ’ (2004) 7 (1) International Arbitration Law Review, 31.

[7] Ibid

[8]  For an interesting analysis on the competition law perspectives of the Pechstein case, see N Voser ‘The Most Recent Decision in the Pechstein Saga: Red Flag for Sports Arbitration?’ (22 January 2015)

[9] Decision 4P.267–270/2002 du 27 mai 2003, Lazutina c. CIO, ATF 129 III 445, Bull. ASA 2003, 465

[10] L Mintas, ‘Dr Laila Mintas: Is this the end of CAS arbitration?’ (3 February 2015)

[11] OLG München · Teil-Urteil vom 15. Januar 2015 · Az. U 1110/14 Kart, paras 135 and 137.

[12] L Radicati di Brozolo (n 5) 32.

[13] J Lukomski, ‘Arbitration clauses in sport governing bodies statutes: consent or constraint? Analysis from the perspective of Article 6(1) of the ECHR’ (2013) 13 The International Sports Law Journal, 69

[14] S Netzle, ‘Jurisdiction of arbitral tribunals in sports matters : arbitration agreements by reference to regulations of sports organisations’ in Arbitration of sports-related disputes (1998,  Basel : Association suisse de l'arbitrage) 47

[15] A Rigozzi, ‘L’importance du droit suisse de l’arbitrage dans la résolution des litiges sportifs internationaux’ (2013) Revue de droit suisse 2013, 320.

[16] Ibid

[17] Swiss Federal Tribunal, Francelino Da Silva Matuzalem v FIFA (27 March 2012) 4A_558/2011

[18] P Landolt, ‘Annulment of Swiss International Arbitration Awards for Incompatibility with Substantive Public Policy: First Annulment in over Twenty Years’ (2012) 27 MEALEY’S International Arbitration Report Issue 4, 22.

[19] Swiss Federal Tribunal, Guillermo Cañas v. ATP Tour (22 March 2007) 4P.172/2006 See also, A Rigozzi (n 13), 321-322.

[20] M Baddeley, ‘La décision Cañas: nouvelles règles du jeu pour l’arbitrage international du sport’ (2007)  CAUSASPORT 2007, 161.

[21] A Rigozzi (n 13), 325.

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Asser International Sports Law Blog | Olympic Agenda 2020: To bid, or not to bid, that is the question!

Asser International Sports Law Blog

Our International Sports Law Diary
The Asser International Sports Law Centre is part of the T.M.C. Asser Instituut

Olympic Agenda 2020: To bid, or not to bid, that is the question!

This post is an extended version of an article published in August on hostcity.net.

The recent debacle among the candidate cities for the 2022 Winter Games has unveiled the depth of the bidding crisis faced by the Olympic Games. The reform process initiated in the guise of the Olympic Agenda 2020 must take this disenchantment seriously. The Olympic Agenda 2020 took off with a wide public consultation ending in April and is now at the end of the working groups phase. One of the working groups was specifically dedicated to the bidding process and was headed by IOC vice-president John Coates.  




The bidding crisis: From Mega to Giga events

The century started with two successful summer and winter Olympics in Sydney and Salt Lake City. However, since then, we could witness the oversized Athens Games that helped to bankrupt Greece, the first Olympic Games of China’s communist dictatorship, and the most expensive Winter Olympics ever in Sochi. In fact, the Olympic Games seem to have left the world of mega-events to enter the universe of giga-events: events that require investments on a massive scale, which are under a permanent global scrutiny and which can have a dramatic impact on local social, economic and environmental life worlds. Meanwhile, the growing competition from countries whose leaders’ political accountability is (to say the least) relative, crowds out modest (and more sustainable) bids. Recent Games, culminating evidently in the Sochi experiment, have shown a propension for grandiosity leading to a lack of respect for their negative impact in terms of environmental, social and economical sustainability. This has led to widespread distrust from the global citizenry; clearly noticeable in places where public opinion is sought after and practically demonstrated by the string of defections in the bids for the 2022 Winter Games. To end this crisis and regain the necessary trust, confidence and passion of the citizens, real changes to the bidding process are required.     


Changing the Olympic bidding process

How could these changes to the bidding process look like? Three types of proposals can be sketched: changing the weighing formula of the different evaluation criteria in order to clearly favour sustainability; introducing a budget ceiling to bids (a kind of financial fair play rule); and, finally, increasing the transparency and fairness of the selection process itself. This is only a set of potential reform orientations, many more good proposals to improve the bidding process have been suggested


Changing the weighing of the Olympic criteria

How much weight is currently put on the sustainability of a candidacy? Very little. To be precise, in the case of Sochi, merely 5,7% of the final mark depended on the quality of the project in terms of its environmental legacy. At the moment, the social and economic sustainability of a project is not even considered in the evaluation process. This explains that despite its very poor environmental showing, the Sochi bid managed to go through the evaluation process unharmed. In an era apprehensive about climate change and environmental hazards, in a time of heightened inequality and economic austerity, however, the sustainability of giga-events cannot be easily brushed aside. The image of the Olympic Games has tremendously suffered from the IOC’s doublespeak: on one side, praising sustainability and environmental responsibility in the Olympic Charter and, on the other, knowingly awarding the Games to bids incompatible with these proclaimed values. Not only must the Olympic Charter be taken seriously, but it is also time for the IOC to put its money where its mouth is. These are exactly the kind of concerns, which, thanks to the Olympic Agenda 2020 process, should finally find their way into the bidding process. 


Introducing a ‘Financial Fair Play’ for bidding

From a purely economic point of view, the Olympics are faced with the emergence of the “nouveau riches”, BRICS and others, which are ready to spend lavishly and sometimes irrationally on “their” Games. In certain countries, where the accountability of government towards their citizens is relative, there are no limits in sight to the size of the investments incurred to get and organize the Games. This competition drives the price of the Games through the roof and crowds out a growing number of countries from the exclusive circle of Game organizers. What can be done to rein it? Why not try out a form of financial fair play: a golden rule limiting on the basis of a reasonable (and context-dependent) formula the amounts a host-city is authorized to spend on bidding for, and organizing of, the Games. Such a rule would limit the costs of organizing the Games to a reasonable amount and refocus the bidding competition on non-economic dimensions. Furthermore, it would pre-empt the prospect of governments overspending on the Games and later facing a wave of global criticisms when the price tag is disclosed and the citizens’ awareness of the costs, in terms of schools or hospitals not-built, turns into anger.  


Towards a transparent and independent selection process

Finally, there is an urgent need of opening up the selection process to public scrutiny. This is not exclusively a concern for the Olympic Games as illustrated by the on-going FIFA World Cup Qatar 2022 scandal. Its two phases, evaluation and nomination, should be institutionally neatly separated. A team composed equally of Olympic family members and external experts should lead the evaluation phase. Its findings should be binding in designating the candidate cities and to some extent binding on the election of the host city by the IOC. Especially, since host-city elections have historically been marred with intrigues and suspicions of votes being sold to the highest bidder. Hence, to restore the image of the Games, the Agenda 2020 should consider making the individual votes public and limiting as much as possible the contacts between bidders and IOC members. In many ways, the IOC operates still as though it were a local Swiss chess club. Political power is concentrated in the hands of its non-elected members, but it has widely outgrown a chess club and now affects millions of people’s lives around the world. Those deserve at least to be able to fully scrutinize the decisions taken, if not to participate in their adoption.  


Bidders of the world Unite!

The Olympic Agenda 2020 might be unsatisfactory in terms of transparency and inclusiveness. Nevertheless, this is a unique opportunity to publicly influence the way the Olympic Games are run and to shape Olympic policies for the years to come. It is the bidders’ (cities, countries, federations) responsibility to seize this opportunity and to raise their voices to impose the changes they see fit, in order to restore the trust of citizens and improve the Games’ public perception. Thus, one can only welcome the recent initiative taken by four NOCs, which have produced a thoroughly argued joint paper on ‘the bid experience’, making an immediate impact on the Olympic Agenda 2020 and forcing the IOC to acknowledge publically the necessity to reform the bidding process. The political battle for the future of the Olympics will be played out until 8 and 9 December 2014, when the IOC Session is due to adopt the changes to the Olympic Charter and its bylaws brought forward in the framework of the Olympic Agenda 2020 process. Until then, stakeholders with a lot at stake, like the bidders, should publically call and argue for the reforms they wish for. A united front of the bidders can and should drive forward the Olympic Agenda 2020 and bear on the fundamental orientations the Games will take in the upcoming years.


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Asser International Sports Law Blog | The New FIFA Intermediaries Regulations under EU Law Fire in Germany. By Tine Misic

Asser International Sports Law Blog

Our International Sports Law Diary
The Asser International Sports Law Centre is part of the T.M.C. Asser Instituut

The New FIFA Intermediaries Regulations under EU Law Fire in Germany. By Tine Misic

I'm sure that in 1985, plutonium is available in every corner drugstore, but in 1955, it's a little hard to come by.” (Dr. Emmett L. Brown)[1]


Back to the future?

Availing oneself of EU law in the ambit of sports in 1995 must have felt a bit like digging for plutonium, but following the landmark ruling of the European Court of Justice (ECJ) in the Bosman case[2], 20 years later, with all the buzz surrounding several cases where EU law is being used as an efficient ammunition for shelling various sports governing or organising bodies, one may wonder if in 2015 EU law is to be “found in every drug store” and the recent cases (see inter alia Heinz Müller v 1. FSV Mainz 05, Daniel Striani ao v UEFA, Doyen Sports ao v URBSFA, FIFA, UEFA) [3] cannot but invitingly evoke the spirit of 1995.

One of the aforementioned cases that also stands out pertains to the injunction decision[4] issued on 29 April 2015 by the Regional Court (Landesgericht) in Frankfurt am Main (hereinafter: the Court) in the dispute between the intermediary company Firma Rogon Sportmanagement (hereinafter: the claimant) and the German Football Federation (Deutschen Fußball-Bund, DFB), where the claimant challenged the provisions of the newly adopted DFB Regulations on Intermediaries (hereinafter: DFB Regulations)[5] for being incompatible with Articles 101 and 102 TFEU.[6] The Court, by acknowledging the urgency of the matter stemming from the upcoming transfer window and the potential loss of clients, deemed a couple of shells directed at the DFB Regulations to be well-aimed, and granted an injunction due to breach of Article 101 TFEU.


(Un)harnessing the brokerage in football

The recently adopted FIFA Regulations on Working with Intermediaries (hereinafter: FIFA Regulations)[7] arguably represent the biggest turning point in the regulation of player and club representation in the history of professional football.[8] While some will argue that by implementing these Regulations, FIFA has thrown in the towel on regulating the ambit of representation in football altogether, it could be said that by steering away from controlling the access to the activity and switching the onus on regulating it, FIFA has not deregulated the activity, but rather shifted the scope of the regulation itself.[9] It has been anticipated that the implementation process would expose several contentious issues (e.g. recommended commission cap, duty of disclosure, representation of minors, suitability of intermediaries, etc.),[10] and the DFB’s adoption of the new Regulation has been no exception in that regard.[11]

The DFB, pursuant to Article 1(2) of FIFA Regulations,[12] and following a rather lengthy exchange of information with the German Football League (Deutsche Fußballliga GmbH, DFL) and the German Association of Players’ Agents (Deutschen Fußballspieler-Vertmittlervereinigung, DFVV),[13] adopted the new DFB Regulations on 13 March 2015. By availing itself of the discretion embedded in Article 1(3) of FIFA Regulations,[14] the DFB tailor-made its regulations, which entered into force on 1 April 2015, to a certain extent, which shall be elaborated upon further below. 

Since the new DFB Regulations by virtue of paragraphs 2 and 3 of Article 3[15] indirectly bound the intermediary agencies through binding players and clubs when entering employment or transfer contracts,[16] which had not been the case with the pre-existent norms, the claimant first unsuccessfully sought the annulment of the Regulations directly from DFB. Subsequently, the claimant sought relief in the form of a temporary injunction from the Court, based upon the pending imminent danger stemming from the abuse of the DFB’s dominant position. Such behaviour, according to the claimant, limited the free choice of profession. Furthermore, according to the claimant, the obligatory disclosure of the remuneration amounts and the prohibition of representation remuneration when the player concerned is a minor went way beyond the borders of necessity and were thus unjustified.[17] The DFB, on the other hand, by rejecting the existence of a pending danger since the claimant had allegedly known of the FIFA Regulations for almost a year, deemed the claim inadmissible due to wrongful recourse to the urgent procedure (Eilverfahren), and additionally claimed the Articles 101 and 102 TFEU to be inapplicable, since the addressed provisions did not restrict competition, but au contraire prevented its distortion (i.e. by prohibiting the abuse of  the intermediary activity, providing for the independence of clubs and players, and guaranteeing transparency and contractual stability, hence bringing their scope within the borders of proportionality).[18]


Intermediaries v DFB: 1-0

The DFB’s guerrilla tactics of throwing the sink back at the claimant screaming for inadmissibility proved rather futile. The Court deemed the claim to be admissible and also found a large portion of the claimant’s arguments in the form of EU law-shaped shells to be well-founded. Subsequently, it granted an injunction as sought from the claimant. It addressed the issue through the prism of the Article 101 TFEU, and specific steps in the reasoning shall be dealt with separately below.

Admissibility as a non-issue

The DFB argued that such a claim could not be made in the urgent procedure, since the issue would pertain to the main cause. However, the Court pointed out that such a claim would be possible under Article 33 of the Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen, GWB).[19] Refusal of such a claim would deprive the claimant of its rights and legal remedies, particularly in the light of the pending danger of losing potential customers (clubs and players), bound directly by the DFB Regulations.[20] The Court also rejected the claim that the issue pertained to an internal decision-making process of the DFB, and said that the adoption of the Regulations had an externally oriented scope and effect.[21]


DFB Regulations are an inter-state trade restricting decision of an association of undertakings

The DFB asserted that it could not be seen as an association of undertakings in the sense of Article 101(1) TFEU considering that it also includes members with an amateur status. By referring to Piau,[22] the Court removed any ambiguity pertaining to the status of the DFB saying that: “...the mere fact that a sports association or federation unilaterally classifies sportsmen or clubs as 'amateur' does not in itself mean that they do not engage in economic activities within the meaning of Article 2 EC.”[23] Furthermore, strengthening its reasoning by first quoting Frubo,[24] stating that: ”Article 101 TFEU applies to associations in so far as their own activities of those of the undertakings belonging to them are calculated to produce the results to which it refers”,[25] and then BNIC,[26] it seemingly left no doubt as to the passive standing of DFB.

Having established the DFB’s status as per Article 101(1) TFEU, the Court moved to the DFB Regulations, and by drawing from Bosman,[27] Lehtonen,[28] and most importantly Piau,[29] qualified them as a decision of an association of undertakings, since they entail the regulation of the economic activity of intermediaries, whereby it is clear “...that the purpose of the occupation of players' agent, under the very wording of the amended regulations, is 'for a fee, on a regular basis [to introduce] a player to a club with a view to employment or [to introduce] two clubs to one another with a view to concluding a transfer contract'...”,[30] and therefore this economic activity cannot be qualified as one of a purely sporting nature.[31]

Albeit steering clear of an explicit reference to CJEU’s vast jurisprudence, the Court deemed the relevant market to be the one of intermediary services where the clubs and the players represented the customers and the intermediaries the providers,[32] hence following to a large extent the pre-established path in Piau.[33] It also pointed out that pursuant the provisions of Article 101(1) TFEU the core of the restriction of competition lied within an agreement (or a decision) which hampered the independence of economic decision making of the companies involved in a particular activity. The present case would prove as no exception since the intermediaries’ ability to provide services would take toll by the eventual non-submission of the signed declaration when entering an agreement with a player or a club upon whom loomed the eventual DFB sanctions. In other words, refusal to declare, which at the same time brought the intermediaries within the scope of DFB norms, limited the intermediaries’ economic freedom to be engaged by players or clubs.[34]

Moreover, the Court had little doubts about the Regulations affecting the inter-State trade. With Bundesliga alone representing the third largest national club football competition in Europe, the size of the market itself leads to the conclusion that the decision in question could have a negative impact on an actual or potential, direct or indirect inter-State provision of intermediary services, all the more so, since it lead to partitioning of markets on a territorial basis. In fact, by invoking Wouters,[35] the Court stressed that: “...it is sufficient to observe that an agreement, decision or concerted practice extending over the whole of the territory of a Member State has, by its very nature, the effect of reinforcing the partitioning of markets on a national basis, thereby holding up the economic interpretation which the Treaty is designed to bring about...[36]


Possible justifications

Having brought the Regulations within the scope of Article 101(1) TFEU, the Court promptly looked at the available justifications, either within the ambit of Article 101(1) TFEU pursuant to the relevant ECJ jurisprudence, or as one of the explicit Treaty exceptions embedded within Article 101(3) TFEU. In light of the former provision it is worth pointing out that the notion of inherence to legitimate (sporting) purposes is crucial in this ambit, since certain potentially restrictive behaviours (e.g. adoption of transfer rules), may be, although caught by Articles 101 and 102 TFEU respectively, exempted from their scope due to their necessity in pursuance of such objectives. Such an inherent necessity must, however, be assessed on a case-to-case basis. Following such reasoning, and by referring to the landmark Meca-Medina case,[37] the Court invoked an almost blasphemous notion in the ambit of EU competition law by stating that such assessment of legitimate goals under Article 101(1) TFEU was to be addressed through the “rule of reason” doctrine.[38]

As an alternative route stemming explicitly from the Treaty, by referring back to Piau, the Court identified the provisions of Article 101(3) TFEU, which envisage that the Regulations “might enjoy an exemption on the basis of this provision if it were established that they contribute to promoting economic progress, allow consumers a fair share of the resulting benefit, do not impose restrictions which are not indispensable to the attainment of these objectives, and do not eliminate competition.” [39]

Summing up, the Court rather curiously, and perhaps simplistically, pointed out that the common denominator of both approaches entailed three key components; namely the Regulations would have to pursue a legitimate goal, and they would have to be necessary and proportionate. As one such legitimate goal, the Court recognised the issue of necessity to level the playing field in football competitions through a transfer system and thereof stemming regulation of the activity of intermediaries in order to prevent eventual abuses in the form of coerced transfers, and, even more importantly, to protect the minors involved in the process.[40] Both parties recognised the existence of past abusive practices that needed to be eradicated. Regardless of the legitimacy of the majority of the aims pursued, the Court established that certain provisions lacked the needed necessity and were disproportionate, as shall be addressed below.[41]


Individual (un)successful claims

Firstly, the Court deemed the registration obligation for clubs and players, which would bring the intermediaries within the scope of DFB and FIFA rules, to be disproportionate. While the registration and declaration obligations as such could be justified, the same could not be said for the pertaining subsumption of the intermediary service under the overarching umbrella of the DFB rules. The disproportionate full submission to DFB rules, which would strip the intermediaries of their possibility of recourse to ordinary justice, could be just as effectively replaced by a proper enforcement by the DFB of the registration rules themselves. Moreover, the Court found it unclear why the DFB would not be able to safeguard the goals pursued by the DFB Regulations before ordinary courts. [42]

Unlike the registration obligation, the duty to submit a criminal record along with the duty to pay a registration fee were seen as justified and thus proportionate in the eyes of the Court. Due to a potentially large impact of the intermediary activity on competition stemming from the potential influence on players and clubs, no less restrictive measure other than a registration duty could be put in place in order to safeguard the transparency of the football leagues. Moreover, considering the utmost necessity to protect the minors, the duty to submit a criminal record is clearly justified. Since the intermediaries financially benefit from their activity, the pertaining registration fee could also be deemed as a proportionate measure.[43]

The third addressed measure, i.e. the remuneration disclosure requirement, was also seen as justified by the Court. The legitimate aims set out in the previous paragraph were also to be pursued through the disclosure of agreements entered into and remuneration paid to the intermediaries. Such measures represented suitable means for controlling the intermediaries’ behaviour and were thus necessary and proportionate.[44]

The same can be said of the prohibition of acceptance of intermediary transfer fees for future transfers. In this context, the premature termination of contracts between clubs and players represented a major incentive for the intermediaries and at the same time a major source of revenue for clubs. The possibility of claiming a share of the transfer fees would therefore draw the intermediaries into seeking actively an early contract termination, as the new Regulations’ provisions were aimed at preventing such external influence, they are considered justified and proportionate.[45]

Fifthly, the imposition of flat-rate transfer fees was deemed unjustified by the Court, since it prohibited the agreed fee to be expressed in percentage pertaining to the cumulative transfer sum. This reinforced doubts that had previously been expressed about the proportionality of the parent FIFA Regulations provision, namely Article 7. Contrary to DFB’s arguments that such a scheme only required an a priori determination of the fee, the Court was not of the opinion that such a restrictive interpretation was appropriate, and that it could also lead to interpreting the provision in the way to detach the flat-rate fee entirely from the transfer sum. In other words, clubs would only be allowed to pay a prefixed amount that could not be expressed in percentage of the entire transfer sum. The Court also had doubts as to how such a restriction would serve the previously mentioned purposes.[46]

Last but not least, the Court also found the prohibition of remuneration of intermediaries of minors having the status of licensed players to be unjustified and disproportionate. By refusing the DFB’s argument to draw parallels with legal representation, the Court rather focused on the potential vulnerability of minors and their susceptibility to influence from the intermediaries, making this the crucial argument for (non)justification of the prohibition.[47] Stressing the legitimacy of a special protection of minors, who would due to their age and consequent inexperience rely heavily on the advice of the intermediaries, it also drew the line between the players plying their trade in the first and second league (licensed players) and others who participated in lower leagues. In the latter case a particular attention ought to have been given to minors brought to Germany from abroad.[48] It was only obvious, according to the Court, that minors playing in the lower leagues should benefit from a higher level of protection due to their stronger economic dependency to the intermediaries and hence susceptibility to their instructions. Minor licensed players, however, due to their market position alone warrant no such protection. Moreover, the significant disproportion of the amount of money spent on transfer fees for licensed minors makes such a prohibition in this ambit even more restrictive.[49]

Summed up, the Court deemed three out of six of the claimant’s legal missiles to have hit their target. First, the intermediaries may still be registered with the DFB without subjecting to its authority. Second, the prohibition of flat-rate transfer fees was unjustified, and third, the prohibition of remuneration of intermediaries of licensed minor players also exceeded the borders of necessity.[50] Since an injunction decision required an imminent and pending danger to be substantiated, as anticipated above, the Court circumvented the DFB’s argument that the claimant had almost a year, hence enough time, to get acquainted with the Regulations, by saying that Article 1(2) of the FIFA Regulations merely provided a minimum compulsory basis to be implemented, and that the DFB adopted substantially different Regulations pursuant Article 1(3) of the FIFA Regulations, leaving significantly less time for the claimant to comply.[51] The reference to previous FIFA Regulations met the same end, since the former pertained only to natural and not to legal persons.[52] 


Side-stepping Article 102 TFEU?

While the Court went to significant depths when analysing the case through the prism of Article 101 TFEU, it quite surprisingly almost completely refused to be drawn into the assessment of the matter through Article 102 TFEU, despite admitting, hence quite possibly just elegantly restating Piau,[53] to a possible existence of a collective dominant position by the DFB and its related associations on the market of intermediary service provision.[54] It merely concluded that there was no abuse in the sense of Article 102 TFEU.[55] One may find this curious at the very least, since the Court itself stated that DFB imposed its rules on non-members, intermediaries in this case, through economic pressure stemming from its monopolistic position on the market in question, which could to a certain extent at least be deemed as abusive.[56]


The epilogue or merely the end of Round One?

With the battle dust temporarily subsided, the DFB has seemingly complied with the Court’s injunction decision by issuing a note in which it restated the judgment’s tenor and informed the interested parties (intermediaries) of an ongoing possibility of a non-binding registration with DFB. The truce may only be a temporary one though, since the DFB has through its president already announced to pursue the matter in the main proceedings and a battle won does not necessarily mean that the war has been won.[57] Regardless of the outcome in Germany though, the issue carries a larger relevance. Since some of the DFB Regulations provisions, addressed in the hitherto analyzed injunction decision, resemble to a large extent if not entirely those embedded in the FIFA Regulations (e.g. the suspended Article 7(7) of DFB Regulations and Article 7(8) of FIFA Regulations),[58] one may wonder if, considering the already pending complaint of the of the Association of Football Agents (AFA) to the Commission,[59] legal challenges of the intermediaries regulations in other countries may only be a matter of time. Especially, since apparently these days EU law conveniently happens to be “available in every drug store”.




[1] R. Zemeckis, B. Gale, Back to the Future (Universal Pictures, 1985).

[2] Case C-415/93, Union royale belge des sociétés de football association ASBL v Jean-Marc Bosman ao, [1995] ECR I-04921.

[3] See inter alia Case AZ: 3 Ca 1197/14, Heinz Müller v 1. FSV Mainz 05, Arbeitsgericht Mainz, 19 March 2015 ; Case 2013/11524/A, Daniel Striani ao v UEFA, Tribunal de première instance francophone de Bruxelles, Section Civile, 29 May 2015.

[4] Case Az. 2-06 O 142/15*, Firma Rogon Sportmanagement v Deutschen Fußball-Bund (DFB), Landgericht Frankfurt am Main, 29 April 2015.

[5] DFB-Reglement für Spielvermittlung, adopted on 13 March 2015.

[6] Treaty on the Functioning of the European Union (TFEU), Consolidated Version, O.J. 2012, C326, 26 October 2012 and as amended by the Croatian Accession Treaty, O.J. 2012, L112/1.

[7] FIFA Regulations on Working with Intermediaries, adopted in Zürich on 21 March 2014.

[8] D. Lowen, A guide to the FA’s Regulations on Working with Intermediaries (www.lawinsport.com, 17 February 2015), <http://www.lawinsport.com/articles/item/a-guide-to-the-fa-s-regulations-on-working-with-intermediaries>.

[9] D. Lowen, FIFA’s Regulation on Working with Intermediaries (T.M.C. Asser Instituut – Summer Programme, 30 June 2015), pp. 2.

[10] N. De Marco, The new FA Intermediaries Regulations & disputes likely to arise (www.lawinsport.com, 31 March 2015), <http://www.lawinsport.com/articles/item/the-new-fa-intermediaries-regulations-disputes-likely-to-arise>.

[11] Focus, Streit mit DFB: Gericht gibt Spielervermittler in Teilen Recht (www.focus.de, 30 April 2015), <http://www.focus.de/regional/frankfurt-am-main/fussball-streit-mit-dfb-gericht-gibt-spielervermittler-in-teilen-recht_id_4650008.html>.

[12] Article 1(2) FIFA Regulations, cited supra note 7: ”Associations are required to implement and enforce at least these minimum standards/requirements in accordance with the duties assigned in these regulations, subject to the mandatory laws and any other mandatory national legislative norms applicable to the associations. Associations shall draw up regulations that shall incorporate the principles established in these provisions.

[13] Rogon v DFB, cited supra note 4, paras. 15-16.

[14] Article 1(3) FIFA Regulations, cited supra note 7: “The right of associations to go beyond these minimum standards/requirements is preserved.

[15] Arts. 3(2), 3(3) DFB-Reglement für Spielvermittlung, cited supra note 5.

[16] Rogon v DFB, cited supra note 4, paras. 16-17: “Mit dieser Erklärung erkennt der Vermittler das Reglement auch für sich als verbindlich an und unterwirft sich damit der Verbandshoheit des Antragsgegners einschliesslich der Sportgerichtsbarkeit.”

[17] Ibid., para. 19.

[18] Ibid., paras. 32-39.

[19] Gesetz gegen Wettbewerbsbeschränkungen (GWB), (BGBl. I S. 1554), 26.07.2011.

[20] Rogon v DFB, cited supra note 4, paras. 43-45.

[21] Ibid., para. 46.

[22] Case T-193/02, Laurent Piau v Commission, [2005] ECR II-00209, para. 70.

[23] Rogon v DFB, cited supra note 4, para. 50.

[24] Case 71/74, Nederlandse Vereniging voor de fruit- en groentenimporthandel, Nederlandse Bond van grossiers in zuidvruchten en ander geimporteerd fruit "Frubo" v Commission, [1975] ECR 00563, para. 17.

[25] Rogon v DFB, cited supra note 4, para. 51.

[26] Case 123/83, Bureau national interprofessionnel du cognac (BNIC) v Guy Clair, [1985] ECR 00391, para. 17.

[27] Bosman, cited supra note 2, para. 127.

[28] Case C-176/96, Jyri Lehtonen and Castors Canada Dry Namur-Braine ASBL v Fédération royale belge des sociétés de basket-ball ASBL (FRBSB), [2000] ECR I-02681, paras. 53-60.

[29] Piau, cited supra note 22, para. 73: “As regards, second, the concept of a decision by an association of undertakings...This is therefore an economic activity involving the provision of services, which does not fall within the scope of the specific nature of sport, as defined by the case-law.”

[30] Ibid.

[31] Rogon v DFB, cited supra note 4, paras. 52-53.

[32] Ibid., para. 55.

[33] Piau, cited supra note 22, paras. 112-115.

[34] Rogon v DFB, cited supra note 4, paras. 57-58.

[35] Case C-309/99, J.C.J. Wouters ao v Algemene Raad van de Nederlandse Orde van Advocaten, [2002] I-01577, para. 95.

[36] Rogon v DFB, cited supra note 4, paras. 59-61.

[37] Case C-519/04 P, David Meca-Medina and Igor Majcen v Commission, [2006] ECR I-06991.

[38] Rogon v DFB, cited supra note 4, paras. 63-64.

[39] Piau, cited supra note 22, paras. 100-104.

[40] Rogon v DFB, cited supra note 4, paras. 66-68.

[41] Ibid., paras. 69-70.

[42] Ibid., paras. 72-73.

[43] Ibid., paras. 75-78.

[44] Ibid., para. 80.

[45] Ibid., paras. 83-84.

[46] Ibid., paras. 86-87.

[47] Ibid., paras. 89-91.

[48] Ibid., para. 93.

[49] Ibid., para. 94: “Für die Vermittlung von Lizenzspielern ist eine derartige Beschränkung allerdings unverhältnismäÿig. Lizenzspieler der ersten und zweiten Bundesliga sind nicht in dem Masse schutzbedürftig wie Vertragsspieler der unteren Ligen.

[50] Handelsblatt, Gericht gibt Spielervermittler teils recht (www.handelsblatt.com, 30 April 2015),<http://www.handelsblatt.com/sport/fussball/streit-mit-dfb-gericht-gibt spielervermittler-teils recht/11716170.html>.

[51] Rogon v DFB, cited supra note 4, para. 104.

[52] Ibid., para. 105.

[53] Piau, cited supra note 22, paras. 117-118

[54] Rogon v DFB, cited supra note 4, paras. 98-99.

[55] Rogon v DFB, cited supra note 4, para. 100.

[56] Ibid., para. 96: “Hier geht es jedoch darum, dass die Antragsgegnerin aufgrund ihrer Monopolstellung Dritte faktisch in die Verbandsherrschaft zwingt, indem sie Verbandsangehörige mit Sanktionen bedroht, sollten diese nicht auf die Antragstellerin im Sinne einer Zustimmung zur Vermittlererklärung einwirken. Insofern fehlt es an der freiwilligen Unterwerfung; es handelt sich vielmehr um eine durch wirtschaftlichen Druck erzwungene Unterwerfung eines nicht verbandsangehörigen Dritten.”

[57] Hamburger Abendblatt, Landgericht bestätigt teilweise neue Spielerberater-Regeln (www.abendblatt.de, 30 April 2015), <http://www.abendblatt.de/sport/article205286615/Landgericht-bestaetigt-teilweise-neue-Spielerberater-Regeln.html>.

[58] Article 7(8) FIFA Regulations, cited supra note 7: “Players and/or clubs that engage the services of an intermediary when negotiating an employment contract and/or a transfer agreement are prohibited from making any payments to such intermediary if the player concerned is a minor ...

[59] D. Lowen, cited supra, note 8.

 

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