On 28 September 2016, the Commission published the non-confidential version of its negative Decision and recovery order regarding the preferential corporate tax treatment of Real Madrid, Athletic Bilbao, Osasuna and FC Barcelona. It is the second-to-last publication of the Commission’s Decisions concerning State aid granted to professional football clubs, all announced on 4 July of this year.[1] Contrary to the other “State aid in football” cases, this Decision concerns State aid and taxation, a very hot topic in today’s State aid landscape. Obviously, this Decision will not have the same impact as other prominent tax decisions, such as the ones concerning Starbucks and Apple. 

Background

This case dates back to November 2009, when a representative of a number of investors specialised in the purchase of publicly listed shares, and shareholders of a number of European football clubs drew the attention of the Commission to a possible preferential corporate tax treatment of the four mentioned Spanish clubs.[2] The preferential tax treatment derived directly from a Spanish sports law of 1990, which obliged all Spanish professional sport clubs to convert into sport limited companies. The justification for the measure was that many clubs had been managed badly because neither their members nor their administrators bore any financial liability for economic losses. This law exempted from this duty to convert those football clubs which had a positive balance in the preceding 4-5 years. The only clubs who at that moment fulfilled these conditions were Real Madrid, Athletic Bilbao, Osasuna and FC Barcelona, and were consequently permitted to remain associations. Sports associations are non-profit entities and, as such, qualified for a partial corporate tax exemption under the Spanish Corporate tax Law. Instead of paying tax for their commercial income at the general rate of 30%, sport clubs were only required to pay tax at a rate of 25%. Moreover, Spain did not include a time period for a possible re-assessment of the financial position of the sport limited companies. Thus, no professional sporting entity has had its legal qualification modified since the original assessment of 1990, irrespective of how the financial health of the entity evolved.[3]

Intervention by the European Ombudsman

The complaint was given a “high priority status” by the European Commission[4] and the allegations of an unfair Spanish tax system were widely covered in the press (see for example here and here). Nevertheless, it took the Commission more than four years to launch a formal investigation and nearly seven to reach a final decision. In fact, there are reasons to believe that the Commission’s delay in investigating the matter was only halted after an intervention by the European Ombudsman. As stated above, the complaint was submitted in November 2011. More than 25 months later, and not having been informed about the progress of the case, the complainant turned to the Ombudsman. According to the complainant, the Commission had failed to decide, in a timely way, whether or not to open the formal investigation procedure. The Ombudsman agreed with the complainant and found that the Commission had not justified its failure to decide on the matter. Furthermore, the public suspicion that the Commission’s inaction might be linked to the fact that the then Commissioner for Competition, Joaquín Almunia, was a socio (member) of one of the football clubs (Athletic Club Bilbao) involved, were highlighted by the Ombudsman in its Recommendation.[5] Even though the Commission has denied that the delay in launching the formal investigation was linked to Almunia’s personal footballing preferences, on 18 December 2013 (a mere two days after receiving the Ombudsman’s recommendation) the Commission decided to open an in-depth investigation into the tax privileges granted to the four Spanish football clubs.[6] 

The Decision

As is the case with most, if not all, State aid and tax cases, the key question is whether the tax measure (or treatment in this case) leads to a selective economic advantage for one or more undertakings, in this case the four professional football clubs.[7] In order to uncover a selective advantage in the form of tax income, the case-law subscribes that one begins by identifying and examining the common regime/system applicable in the Member State concerned. Secondly, an assessment is made of whether the treatment derogates from that common system. This assessment includes deciphering the objective assigned to the tax system, as well as determining whether the economic operators in question (i.e. the four football clubs) are in a comparable factual and legal situation to the other economic operators falling under the common system.[8] If the four clubs are in a comparable factual and legal situation, but their tax treatment derogates from the common system, this treatment will be considered selectively advantageous. Third and lastly, it is necessary to appraise whether the tax treatment is justified by the logic and nature of the tax system.[9] As regards this justification appraisal, there are two important aspects to note: First of all, there is a shift in the burden of proof, since it is for the Member State which has introduced such a differentiation in charges in favour of certain undertakings active in professional football to show that it is actually justified by the nature and general scheme of the system in question.[10] Secondly, this justification appraisal has to be separated from the general justification appraisal of Article 107(3), the latter of which will only take place after State aid in the sense of Article 107(1) is fully established.

The common system applicable and the objective assigned to the system

In both the Decision to open a formal investigation and the final Decision, the Commission considered that the common system applicable is that of the corporate tax law. This has been the common system since the professional sporting entities had to convert to limited companies in 1990. The Commission also held that the objective assigned to the system is generating State revenues on the basis of company profits.[11]

Are the four clubs in a comparable factual and legal situation?

The Commission believes that Real Madrid, Athletic Club Bilbao, Osasuna and FC Barcelona are in a comparable factual and legal situation as other professional sport companies in light of the abovementioned objective of the tax system, and cannot see how they should be treated differently. Nonetheless, Spain and the clubs argued that the clubs were not in the same factual and legal situation, because the clubs’ aim was not to make profits. Instead, all profits made have to be reinvested in the club itself. They also claimed that the CJEU’s case law allows for exceptions “in light of the peculiarities of cooperative societies which have to conform to particular operating principles”. Indeed, “those undertakings cannot be regarded as being in a comparable factual and legal situation to that of commercial companies, provided that they act in the economic interest of their members, the members being actively involved in the running of the business and entitled to equitable distribution of the results of economic performance”.[12] The fact that clubs cannot distribute profits to shareholders is a relevant peculiarity in the eyes of Spain.

The Commission rebutted Spain’s claim that sport associations and sport limited companies are not in the same factual and legal situation.   It firstly criticised Spain’s obligatory conversion of all-but-four sport associations into sport limited companies in 1990 by highlighting that “differences in the economic performance cannot justify different treatment as regards the obligatory form of organisation or the lack of choice in that respect. Losses are not intrinsic to a certain form of organisation. The business performance is therefore not an objective criterion justifying different taxation bases or imposing certain forms of incorporation for an indefinite period”.[13] Moreover, not being able to distribute profits to shareholders “cannot support a lower taxation of certain football clubs when compared to other professional sporting entities. (…) Those four clubs, although they are non-profit entities, actively seek to make profit themselves”, in a comparable way to other professional sporting entities.[14] Indeed, “the fact that clubs are obliged to reinvest the income they realise (…) does not weaken their competitive position, nor justifies a different, more favourable, tax treatment with respect to other entities active in professional sport. It rather drives them to improve their facilities”.[15]

Justification by the nature and logic of the tax system

As stated above, it is up to the Member State concerned to argue why the different tax treatment is justified under the general tax system. The Decision shows that Spain, the four clubs and La Liga (who was given interested party status by the Commission) presented a variety of arguments that in their eyes justified the different treatment. Three of these arguments were the followings:

1. Associations have stricter internal control mechanisms than sporting limited companies;

2. Associations have fewer possibilities of access to the capital market than sporting limited companies;

3. Associations are placed at a disadvantageous position under UEFA’s Financial Fair Play rules compared to sporting limited companies.

As regards the first justification brought forward, it underlines the liability regime imposed on the management body of a sport association. For example, a club’s management board “must provide a bank guarantee covering 15% of the club’s budgeted spending in order to guarantee any losses generated during its term. In addition, management board members will be strictly liable, in an unlimited manner, with their present and future personal assets, for any losses generated that exceed this guaranteed amount.”[16] Nonetheless, the Commission held that this justification is at odds with the rationale for the conversion of the other sport clubs to sport limited companies in 1990, which was the fact that many clubs had been managed badly. “If there was a need for certain clubs to be subject to stricter controls, the obligatory transformation into a limited company would not be necessary to pursue the purpose of that law.[17]

Further, Spain’s claim that clubs have fewer possibilities of access to the capital market cannot be seen as a justification for deviating from the common tax system. Simply put, “if the disadvantages of the clubs in this respect are as manifest as [Spain and the clubs] assert, they always have the possibility to change their corporate form”.[18]

Last, the Commission considers the Financial Fair Play rules of the UEFA to be “internal rules set by a football organisation which aim to ensure a reasonable financial management of sport entities and to avoid continuous loss making. They cannot justify a different taxation of profits by the State”.[19] With this last consideration, the Commission displays a rather benevolent attitude towards UEFA’s Financial Fair Play Rules. Indeed, refusing to attack these rules in any way is very much in line with its previous public statements on FFP, such as the Commission’s and UEFA’s Joint Statement on FFP of March 2012 and the Cooperation Agreement between the Commission and UEFA of October 2014.

Compatibility assessment under Article 107(3)

As can be read from paragraph 85 of the Decision, neither Spain nor the beneficiaries have claimed that any of the exceptions provided for in Article 107(2) and 107(3) TFEU apply in the present case. Generally speaking, successful justifications under Articles 107(2) and (3) are uncommon in State aid and taxation cases. Two possible reasons for this can be deciphered: On the one hand, Member State and interested parties seek justifications by the nature and logic of the tax system, i.e. they argue that the justification rules out a selective advantage for one more undertakings, thereby ruling out State aid under Article 107(1). On the other hand, State aid through tax advantages are in most cases considered as operating aid. Operating aid can normally not be considered compatible with the internal market under Article 107(3) TFEU in that it does not facilitate the development of certain activities or of certain economic areas, nor are the tax incentives in question limited in time, digressive or proportionate to what is necessary to remedy to a specific economic handicap of the areas concerned.[20] In the preferential corporate tax treatment of four Spanish football clubs case, the Commission noted that a lower tax burden than one that should normally be borne by the clubs in the course of their business operations, should be considered as operating aid.[21] Hence, this type of aid cannot be considered compatible aid under any of the exceptions of Article 107(3).

Yet, the tax benefit scheme in the Hungarian sport sector decision of 2011 provides an example of a tax benefit scheme for the sport sector that is declared compatible State aid under Article 107(3)c) TFEU. In this case, the Commission held that the scheme was introduced in a sufficiently transparent and proportionate manner, i.e. that the measure was well-designed to fulfil the objective of developing the country’s sport sector.[22] Moreover, the Commission acknowledged the special characteristics of sport and held that the objective of the scheme is in line with the overall objectives of sport as stipulated in Article 165 TFEU, namely that the EU “shall contribute to the promotion of European sporting issues”, because the sport sector “has enormous potential for bringing the citizens of Europe together, reaching out to all, regardless of age or social origin”.[23]

As regards the preferential corporate tax treatment of four Spanish football clubs case, no reference was made by Spain or the interested parties to Article 165, or how the preferential tax treatment could contribute to the promotion of sporting issues or values. Perhaps Spain and the four clubs were aware that such a justification would not fly, since the preferential tax treatment is only beneficial to four football clubs and not to the sports sector in general.

Recovery of the aid

Given that the Commission considered the preferential tax treatment to be unjustifiable State aid, a recovery decision was adopted. According to the Commission, the amount of the aid to be recovered from the four football clubs consists of the difference between the amount of corporate tax which the clubs actually paid and the amount of corporate tax which would have been due under the general corporate regime starting from the year 2000.[24] The Commission further recalls that the exact amount of the aid to be recovered will be assessed on a case by case basis during the recovery proceeding which will be carried out by the Spanish authorities in close cooperation with the Commission.[25]

In this regard, it is important to mention that Spain amended the corporate tax rules in November 2014 and new rules entered into force on 1 January 2015.[26] Under the amended law, the corporate income tax rate of 30% for all limited companies will be reduced to 28% for 2015 and to 25% from 2016 onwards. This includes limited sport companies as well, which will, from 2016, be submitted to that 25% corporate tax rate.[27] In other words, since there is no longer a different tax treatment for associations compared to sport limited companies as of 2016, Spain has seized to grant (unlawful) State aid to the four professional football clubs. The recovery will thus only involve the advantages obtained until the end of 2015. 

Conclusion

Few will disagree with the Commission in that the Spanish corporate tax system allowed for an economic selective advantage to be granted to Real Madrid, Athletic Club Bilbao, Osasuna and FC Barcelona over more than 25 years, and without the presence of an acceptable justification for such a favourable treatment. Having said this, this particular “saga” has not quite ended after it became clear that Athletic Club de Bilbao (at least) appealed the Commission’s Decision in front of the General Court of the EU.

Notwithstanding the upcoming Court case, the practical impact of this Decision will probably be very limited. Firstly, the actual aid that needs to be recovered by Spain will be relatively low in financial terms. As can be read in the Commission’s press release of 4 July 2016, it is estimated that the amounts that need to be recovered are around €0-5 million per club.[28] The Spanish government is yet to announce how much it will recover, but Real Madrid and FC Barcelona in particular will have no difficulties returning the aid, irrespective of what the amount exactly is. Secondly, by lowering the corporate tax rate for all limited companies in 2015 and 2016, Spain cannot be considered anymore as granting State aid to its professional football associations based on the corporate tax system. This also means that there is no more reason to believe that the European Commission could “force” the four clubs to change their legal status from club to sport limited company through the enforcement of EU State aid rules, as some have insinuated. The fans of these clubs were dreading this outcome because becoming a sport limited company would open the doors to external investors, who would not necessarily in their eyes have the best interest of the clubs in mind.

[1] The Commission has previously published: Commission Decision of 4 July 2016, SA.41613 on the measure implemented by the Netherlands with regard to the professional football club PSV in Eindhoven; Commission Decision of 4 July 2016, SA.40168 on the State aid implemented by the Netherlands

in favour of the professional football club Willem II in Tilburg; Commission Decision of 4 July 2016, SA.41612 on the State aid implemented by the Netherlands in favour of the professional football club MVV in Maastricht; Commission Decision of 4 July 2016, SA.41614 on the measures implemented by the Netherlands in favour of the professional football club FC Den Bosch in 's-Hertogenbosch; Commission Decision of 4 July 2016, SA.41617 on the State aid implemented by the Netherlands in favour of the professional football club NEC in Nijmegen; and Commission Decision of 4 July 2016, SA.33754 on the State aid implemented by Spain for Real Madrid CF. The last remaining decision to be published is Commission Decision of 4 July 2016, SA.36387 Aid to Valencia football clubs.

[2] Draft recommendation of 16 December 2013 of the European Ombudsman in the inquiry into complaint 2521/2011/JF against the European Commission, points 1-3.

[3] Commission Decision of 4 July 2016, SA.29769 on the State Aid implemented by Spain for certain football clubs, paras. 5-9.

[4] Draft recommendation of the European Ombudsman in the inquiry into complaint 2521/2011/JF against the European Commission, point 13.

[5] “Rather than allaying suspicions regarding a conflict of interests, and regarding inappropriate influences on the decision making process, the Commission's failures here have actually added to those suspicions”.

[6] Interestingly enough, on that same day, the Commission decided to open an in-depth investigation into State guarantees in favour of three Spanish football clubs in Valencia and land transfers by the Council of Madrid to Real Madrid: Commission decision of 18 December 2013, SA.36387, Spain—Alleged aid in favour of three Valencia football clubs; Commission decision of 18 December 2013, SA.33754, Spain—Real Madrid CF.

[7] C Quigley, “European State Aid Law and Policy”, Hart Publishing (2015), pages 109-127.

[8] See for example Joined Cases C-78/08 to C-80/08 Paint Graphos and others ECLI:EU:C:2011:550, para. 49.

[9] Commission Decision of 4 July 2016, SA.29769, para. 51.

[10] Commission Decision of 4 July 2016, SA.29769, para. 59. See also Case T-211/05 Italian Republic v Commission ECLI:EU:T:2009:304, para. 125.

[11] Commission decision of 18 December 2013, SA.29769, Spain—State aid to certain Spanish professional football clubs, para. 16; and Commission Decision of 4 July 2016, SA.29769, para. 53.

[12] Commission Decision of 4 July 2016, SA.29769, para. 62; and joined Cases C-78/08 to C-80/08 Paint Graphos and others ECLI:EU:C:2011:550, para. 61.

[13] Commission Decision of 4 July 2016, SA.29769, para. 56.

[14] Ibid, para. 65

[15] Ibid, para. 67.

[16] Ibid, para. 24.

[17] Ibid, para. 61.

[18] Ibid, para. 68.

[19] Ibid, para. 71.

[20] See for example Commission Decision of 10 October 2015, SA.38374 on State aid implemented by the Netherlands to Starbucks, para. 433.

[21] Commission Decision of 4 July 2016, SA.29769, para. 86.

[22] Commission Decision of 9 November 2011, SA.31722 – Hungary - Supporting the Hungarian sport sector via tax benefit scheme., paras 95-98.

[23] Ibid, paras 86-87. For more information on the tax benefit scheme in the Hungarian sport sector decision, see O. van Maren, “The EU State aid and Sport Saga: Hungary’s tax benefit scheme revisited? (Part 1)”, Asser International Sports Law Blog, 18 May 2016.

[24] According to Article 17(1) of the State Aid Procedural Regulation 2015/1589, the powers of the Commission to recover aid are subject to a limitation period of ten years. Since the Commission asked Spain for information for the first time in 2010, the recovery of the tax difference starts with the taxation year 2000.

[25] Commission Decision of 4 July 2016, SA.29769, paras. 93-97.

[26] Ley 27/2014 de 27 noviembre 2014, del Impuesto sobre Sociedades, BOE of 28 November 2014. Article 29(1) stipulates that “El tipo general de gravamen para los contribuyentes de este Impuesto será el 25 por ciento”.

[27] Commission Decision of 4 July 2016, SA.29769, para. 34.

[28] European Commission - Press release IP/16/2401 of 4 July 2016, State aid: Commission decides Spanish professional football clubs have to pay back incompatible aid.

Editor’s Note: Saverio Spera is an Italian lawyer and LL.M. graduate in International Business Law from King’s College London. He is currently an intern at the ASSER International Sports Law Centre.

The time is ripe to take a closer look at the CAS and its transparency, as this is one of the ways to ensure its public accountability and its legitimacy. From 1986 to 2013, the number of arbitrations submitted to the CAS has grown from 2 to more than 400 a year. More specifically, the number of appeals submitted almost doubled in less than ten years (from 175 in 2006, to 349 in 2013[1]). Therefore, the Court can be considered the judicial apex of an emerging transnational sports law (or lex sportiva).[2] In turn, the increased authority and power of this institution calls for increased transparency, in order to ensure its legitimacy.[3]

One might ask why focusing on the level of transparency of an arbitral institution is so important, given the traditional aura of confidentiality that has always accompanied arbitral proceedings. The answer is multifaceted. Firstly, a cursory look at the developments of international commercial arbitration and, more significantly, international investment arbitration shows that confidentiality is not anymore the untouchable hallmark that it once was.[4] Secondly, and most importantly, the peculiarities of the CAS Appeal Procedure make this body look like an arbitral institution but function in a way that is more akin to an international court. Furthermore, it is well known that one of the foundations of domestic and international arbitration is party autonomy. Parties freely opt to defer their dispute to an arbitral panel rather than a court for a variety of reasons, one of which can actually be the confidential nature of arbitration. That said, it is hard to ground the CAS Appeal Procedure on party autonomy. According to the CAS Code (Art. R47), in order for the CAS to have the necessary jurisdiction to hear an appeal, either the parties have expressly agreed to it, or an arbitration clause is contained in the statutes or regulations of the governing body issuing the decision under appeal. In practice, the regulations of the Sports-Governing Body often contain an arbitration clause in favour of the CAS, or these bodies require athletes to sign a specific arbitration agreement as a precondition for participating in an event or competition.[5] An example of the former practice is given by the FIFA Statutes, which – at Art. 59 expressly require that national federations insert an arbitration clause in favour of the CAS in their regulations, and – at Art. 58 imposes that “(a)ppeals against final decisions passed by FIFA’s legal bodies and against decisions passed by confederations, members associations or leagues shall be lodged with CAS”. An example of the latter is given by Bye-law 6 to Rule 44 of the Olympic Charter, which obliges athletes entering the Olympic Games to sign a form containing a clause which devolves the CAS exclusive jurisdiction over any dispute arising in connection with the participation to the Games.

In such a framework, athletes face the alternative between not competing at all and accepting to resort to the CAS in case of a dispute. The post-consensual foundation of the system is a feature that stands in irreconcilable conflict with the logic of international commercial arbitration, based on party autonomy. If the free will of the parties in choosing to arbitrate rather than litigate justifies, to a limited extent, a limitation of transparency in favour of confidentiality in international commercial arbitration, what justifies a low level of transparency at the CAS?

In this regard, for example, the level of transparency of international investment arbitration has been subjected to intense scrutiny. Transparency should then, a fortiori, be scrutinized in the realm of sports arbitration, and in particular at the CAS, whose central position in the lex sportiva is widely acknowledged.

This blog will focus on the two key issues related to the CAS’ transparency. Firstly, the availability of information about arbitrators on the CAS website. Secondly, and most importantly, the publication and ready availability of CAS awards. Furthermore, as the CAS ordinary procedure resembles traditional commercial arbitration, the blog will be only concerned with awards stemming from the Appeal procedure. 

Lack of transparency concerning the arbitrators

Articles R33 to R36 of the CAS Code deal with independence and impartiality of CAS Arbitrators as a conditio sine qua non of the arbitration proceedings.[6] Moreover, these provisions provide for mechanisms to guarantee this independence together with measures at disposal of the parties that want to challenge the independence or impartiality of an arbitrator. Yet to diligently exercise their right, and ensure the independence of arbitrators, parties need full access to information on the arbitrators.

Analysed through the lens of transparency, the problems arise from the fact that it is difficult to assess the inclinations and history of arbitrators prior to initiating proceedings before the CAS. In other words, given the limited information on arbitrators found on the CAS website[7], parties are not equipped with the necessary tools to make a fully informed choice. There is always a risk for conflicts of interest that parties to CAS arbitration should be able to assess on a level playing field, i.e. through a simple visit to the CAS website. Thus, more transparency with regards to the information provided about arbitrators would help reduce the prevailing information asymmetry between the one-shotters (mainly the athletes and their lawyers) and the repeat players (mainly the SGBs and their lawyers/legal counsels) at the CAS. Not only should the section ‘List of Arbitrators’ give access to each arbitrator’s jurisprudential record and relevant past or present contractual relationships. It should also list publications or comments arbitrators have released in the past, as some of them might have already formed a view on a certain type of cases. Although this is not always an indicator of bias, it would permit the parties to make a better-informed choice. Furthermore, and more importantly, in order to level the playing field between the parties, the information about arbitrators should also include a reference to who nominated them in past CAS arbitrations. Additionally, the fact that dissenting opinions are not recognised nor notified by CAS^[8] adds another layer to a feeling of opacity surrounding the arbitrators’ profiles and views.

Finally, according to Art. R33 CAS Code, ICAS draws up the list of arbitrators. From the point of view of securing the CAS’ transparency and accountability, it would be necessary that the nomination process be publicly scrutinized. Thus, ICAS should publish the name of the institutions putting forward each new arbitrator, as well as the reasons why they were considered adequate candidates.  

Lack of transparency in the publication of awards

The lack of transparency of the CAS is further illustrated by the process followed for the publication of its awards (and in particular awards of the Appeal Division).

The CAS Code provides rules for the publication of awards in the Ordinary Procedure (Art. R43) and the Appeal Procedure (Art. R59). For the Ordinary Procedure the default rule is confidentiality ‘unless all parties agree or the Division President so decides’. The rule favours a presumption of confidentiality because the CAS Ordinary Procedure is mainly used for commercial disputes based on the clear consensual agreement of the parties to submit to CAS arbitration. However, it is interesting to note that even in the similar realm of international commercial arbitration confidentiality is not an unchallenged hallmark anymore. International commercial arbitration awards are being voluntarily published with increased frequency[9] and some authors even advocate the adoption of a presumption of openness of the awards.[10] In fact, although the need for transparency in commercial arbitration is less compelling than in investment arbitration due to the private interests at stake, the general public may still be affected in a variety of ways and therefore needs to have access to the decisions. [11]

Conversely, the default rule for the CAS Appeal Procedure is publicity. Art. R 59(7) provides that “(t)he award, a summary and/or a press release setting forth the results of the proceedings shall be made public by CAS, unless both parties agree that they should remain confidential. In any event, the other elements of the case record shall remain confidential”. The rationale for a different treatment between the Ordinary Procedure and the Appeal Procedure lies in the consideration that, unlike the more commercially-oriented disputes destined to the Ordinary Procedure, appeals concern disciplinary decisions issued by international federations that are of interest to the public and that, in any case, might have already been disclosed.[12]

From a comparative point of view, it is noteworthy that the public interests at stake are one of the reasons why international investment arbitration, as opposed to – or at least more rapidly than – commercial arbitration, has shifted from a presumption of confidentiality to a presumption of openness.[13] In oversimplified terms, investment arbitration disputes involve States, which – for instance – have to resort to the national budget to pay in case of adverse awards. Also, governments’ public policies are often challenged before investment arbitral tribunals by foreign investors. All these matters are of evident public interest and were a key factor in pushing for more transparency. In the field of international investment law this process was initially triggered by NAFTA Chapter 11 and its interpretation by the Free Trade Commission (FTC), followed by the 2006 amendment to the ICSID Arbitration Rules. The development of the UNCITRAL Rules on Transparency, which also provide for amicus curiae submissions and open hearings, made another important stride in that direction.

Turning the attention back to the CAS, all the awards published are released on the CAS website. Although it could be argued that, at least for the Appeal Procedure, the default rule should go further down the road of transparency following the trend in treaty investment arbitration, a transparency-weary commentator could potentially be satisfied with the existing framework of the CAS Code, if only the CAS would implement it consistently. Instead, the CAS administration seems to follow a rather opaque and discretionary publication policy that gives rise to major transparency issues, the main one being the fact that, as we will see, only a limited number of awards are published on the CAS website. 

The CAS statistics include the number of Appeals submitted to the CAS (until 2013) and it is easy to determine the number of awards published per year in the CAS Database between the entry into force of the Code (22 November 1994) and the end of 2013. We compared the two figures and obtained the percentage of awards published each year in relation to the number of appeals submitted.[14]

A quick glimpse at the table suffices to notice an unfortunate trend in the publication policy of the CAS. If we exclude the first couple of years, in which the number of appeals submitted were extremely limited, the percentage of awards published is constantly below 30% (with the sole exceptions of 2001, 2002 and 2008, and – in any case –substantially below the still hardly acceptable threshold of 50%). The figures get even more striking as the workload of the CAS increased. From 2009 onwards, the average percentage of appeal awards published stands at a disappointing 17.5%!

This state of affairs significantly hampers predictability and coherence of the CAS jurisprudence, as well as threatens the objective of providing legal certainty to the sporting world at large, which is at the heart of the appeal procedure at the CAS. Indeed, the CAS jurisprudence has acquired throughout the years a law-making role that, in turn, calls for full transparency of its awards. If we read through the CAS case law we can find that arbitrators often refer, and demonstrate a consistent deference, to CAS jurisprudence.[15] To this end, transparency becomes a central issue, as it prevents inconsistency by subjecting the CAS panels to the critical scrutiny of their peers. After all, the need for coherence has been stressed by the CAS itself when it has recognised that, in spite of the lack of stare decisis at the CAS, arbitrators are disposed to “follow the reasoning of a previous Tribunal […] both of a sense of comity and because of the desirability of consistent decision of the CAS, unless there were a compelling reason, in the interest of justice, not to do so”.^[16] From the point of view of the potential parties to CAS arbitration this is of particular importance. If awards are systematically published, lawyers (and in fine the parties) are better able to determine before initiating the arbitration whether their case is likely to succeed. Furthermore, the availability of awards on the CAS website would put repeat players and one-shotters on an equal playing field, eliminating – at least in this regard – the edge that the former gain on the latter.

The need for predictability requires not only awards to be published, but also to be promptly published after they are rendered. The potential disputing parties might have an interest in having previous awards available quickly. In this regard the above-mentioned role of precedents in CAS jurisprudence plays again a significant role. It has been noticed how some decisions are based on solutions adopted in previous awards that have not yet been published.[17] Having the award readily at disposal is necessary for the parties’ legal argumentation. This way the party’s counsel can, respectively, either use the award as a valid leg to bolster her arguments or criticise the position recently adopted by a panel on the same issue.[18] Additionally, a more systematic publication of recent awards online would significantly contribute to increase the level of transparency at the CAS, as the web represents a great opportunity for the public in terms of speed and accessibility. On the CAS website it is possible to find a section specifically dedicated to ‘recent decisions’. This section, though, does not seem to be organised as systematically as it could be. The CAS’ policy regarding the recent decision section of its website is extremely confusing. It includes some awards from 2016 and 2015, but not all the awards from these years available in the CAS database, as well as older awards from 2012 and 2011, which can hardly count as ‘recent decisions’. Apart from the consideration that “these awards disappear from the website after a few weeks and it is not possible to find them anymore”[19], a more systematic publication of the recent awards would be desirable. A valid model to follow has been identified in the websites of the Italian Camera di conciliazione e di arbitrato per lo sport (CCAS) and the Canadian Centre for Ethics in Sports (CCES), where the decisions taken are systematically published without excessive delay.[20]

Conclusion

There is a clear, widespread and apparently unstoppable demand for transparency in contemporary international law. This demand has been voiced by civil-society, governments and international institutions with increased frequency. Thus, more room for transparency has been made within international institutions in the last few years.[21] We have seen very briefly how even in the confidentiality-savvy field of international arbitration transparency has made its way up on the ladder of priorities. In sports arbitration, where the jurisdiction is often not exercised over the parties on the basis of their consent[22], the judicial activity of the CAS must be a fortiori open to scrutiny not only by the parties but by the public at large. There are many ways to evaluate the legitimacy of a court. One of these is the persuasion among the public that an international court has the right to exercise authority in a given domain. To be persuaded, it is essential that the public has a possibility to assess how the CAS carries out its activities and, therefore, be allowed the broadest access possible to CAS awards to be able to evaluate (and criticize) their rationality. A greater transparency at the CAS would allow for greater participation of those that might be affected by its activity.

This call for greater accountability of international courts and tribunals, though, does not seem to resonate much at the CAS. If one looks, as we have done in this blog, at the reality of transparency at the CAS, one cannot help feeling disappointed. Information about arbitrators is scarce and it is hard to find any consistency in the publication of CAS awards.

Yet the CAS could intervene on these two key aspects. To this end, we propose a few brief recommendations for the CAS administration to follow.

Firstly, the section of the CAS website ‘List of Arbitrators’ should be enriched with all the relevant information concerning arbitrators. Therefore:

First recommendation: The CAS should include in the ‘List of Arbitrators’ section of the website a downloadable individualized PDF comprising: jurisprudential records, past or present relevant contractual relationships, publications or comments arbitrators have released in the past and a summary indicating who nominated them in past CAS arbitrations.

Secondly, the CAS should make sure that all its appeal awards are promptly available to the public. Therefore:

Second recommendation: The CAS should simply remove the phrase ‘unless both parties agree’ from the provision of Art. R59. Thereafter, parties would be in principle deprived of the authority to veto the publication of a sentence.

Even if one believes that – notwithstanding its peculiarities – the Court operates as a traditional arbitral institution, a systematic reform of the publication policy of the CAS would be urgently needed. The CAS website (and database) need to be modernized to facilitate a swift and easy access of the public to the awards. Therefore:

Third recommendation: The ‘recent decisions’ section should contain (for a short timeframe, maximum three months) all the recently decided awards and the database should provide all the awards rendered and not only less than a fifth as is currently the case.

There is much to do, but with a bit of will the CAS can become a world-wide leader in terms of arbitral transparency and greatly strengthen its legitimacy and standing in the eyes of its users and of the public at large.

[1] The statistics used for this article are taken from the CAS website, the available data stops on 31 December 2013.

[2] Lorenzo Casini, The Making of a Lex Sportiva by The Court of Arbitration for Sport  (2012). German Law Journal, Vol. 12 n. 5, 452, Antoine Duval, Lex Sportiva: A playground for transnational law (2013). European Law Journal, Vol. 19 Issue 6, 822-842.

[3] Anne Peters, Towards Transparency as a Global Norm in Andrea Bianchi and Anne Peters, Transparency in International Law, Cambridge University Press 2013, 557.

[4] See Cindy G. Buys, The tensions between confidentiality and transparency in international arbitration, The American Review of International Arbitration (2003), Catherine A. Rogers, Transparency in International Commercial Arbitration  (2006) and Stephan W. Schill, Five times transparency in international investment law (2014), The Journal of World Investment and Trade, Volume 15, Issue 3-4.

[5] Rigozzi/Hassler, Sports Arbitration under the CAS Rules, Chapter 5 in Arbitration in Switzerland, Kluwer Law International (2013), 988.

[6] Despina Mavromati & Matthieu Reeb, The Code of the Court of Arbitration for Sport, Commentary, Cases and Materials, Kluwer Law International (2015), 134.

[7] In some cases information is limited to a couple of lines, e.g. “Juris doctor; Professor of International Law at […] University School of Law; practicing lawyer; international arbitrator”. See http://www.tas-cas.org/en/arbitration/list-of-arbitrators-general-list.html, accessed 19 January 2017.

[8] The last part of Art. R 59(2), inserted with the 2010 revision of the CAS Code, reads as follows: “Dissenting opinions are not recognized by CAS and are not notified”.

[9] Catherine A. Rogers, Transparency in International Commercial Arbitration, (2006). Penn State Law, 23.

[10] See, among others, Cindy G. Buys, The tensions between confidentiality and transparency in international arbitration, The American Review of International Arbitration (2003), 121.

[11] Cindy G. Buys, Ibid, 135.

[12] Despina Mavromati & Matthieu Reeb, The Code of the Court of Arbitration for Sport, Commentary, Cases and Materials, Kluwer Law International (2015), 588.

[13] Stephan W. Schill, Five times transparency in international investment law (2014), The Journal of World Investment and Trade, Volume 15, Issue 3-4, 369.

[14] The accuracy of the findings is limited by the lack of precision of the CAS’ statistics. Namely, in the statistics section of the website it is possible to retrieve only data referring to the Appeals submitted every year but not to the appeal awards rendered. Therefore, our yearly comparison cannot take fully into account the temporal shift between the submission of the case and the rendering of the decision (as well as the limited number of cases which were withdrawn). In other words, in reality, the share of awards published is probably slightly higher than indicated in the table.

[15] Gabrielle Kaufmann-Kohler, Arbitral Precedent: Dream, Necessity or Excuse? (2006). Arbitration International, 365.

[16] CAS 96/149, A. C[ullwick] v. FINA, p. 251, 258 – 259, cited in Antonio Rigozzi, l’Arbitrage internationale en matiére de sport, (2005), 638.

[17] Antonio Rigozzi, l’Arbitrage internationale en matiére de sport, (2005), 640.

[18] Going back with the memory to a few years ago, it has be noted how Pavle Jovanovic’s counsel would have had great benefit in having the possibility to read the award rendered in the case that saw the French judoka Djamel Bouras opposing the International Judo Federation in a doping case, which was not yet published when the Jovanovic case was submitted. Had the award been promptly published he would have had the chance to invoke the solution contained therein (See Antonio Rigozzi, l’Arbitrage internationale en matiére de sport, (2005), 639).

[19] Antonio Rigozzi, ibid, 641.

[20] Antonio Rigozzi, ibid, 642.

[21] Anne Peters, The Transparency Turn of International Law (2015), The Chinese Journal of Global Governance, 3.

[22] For a wider discussion on the lack of consent in sports arbitration, see A. Rigozzi & F. Robert-Tissot, “Consent” in Sports Arbitration: Its Multiple Aspects’, in E. Geisinger & E. Trabaldo de Mestral (eds.), Sports Arbitration: A Coach for other players? (2015), 59 -60; A. M. Steingruber, Sports Arbitration: how the structure and other features of competitive sports affect consent as it relates to waiving judicial control, 20 American Review of International Arbitration (2009), 59, 73; M.A. Weston, Doping Control, Mandatory Arbitration, and Process Dangers for Accused Athletes in International Sports, 10 Pepperdine Dispute Resolution Law Journal (2009), 5, 8; and D. H. Yi, Turning Medals into Metal: Evaluating the Court of Arbitration of sport as an international tribunal, 6 Asper Review of International Business and Trade Law (2006), 289, 312.