Swiss Federal Tribunal Overturns CAS

[NOTE: This post has been updated with a few small clarifications]

On March 27, the Swiss Federal Tribunal, the nation's highest court, overturned a ruling of the Court of Arbitration for Sport, marking the first time in its history that the CAS has seen a verdict overturned on substantive grounds (announced here in PDF). I posed a few questions about the ruling to Jean-Loup Chappelet, a professor at IDHEAP in Lausanne who is also one of the world's foremost experts on international sports governance. I report here what I learned from Chappelet and also some thoughts on the broader significance of the Tribunal's decision.

The CAS is an arbitration body incorporated under Swiss law, first established in 1983 by the International Olympic Committee to provide an independent, authoritative body to arbitrate disputes involving the governance of sport (the body does not arbitrate disputes originating on the field of play). Appeals can be made to the Swiss tribunal primarily on matters of procedure.

Chappelet tells me that "CAS is supervised by a Swiss Foundation (article 80 et seq of Swiss Civil Code) called "International Council of Arbitration for Sport" (ICAS). It functions under the framework of the Swiss federal act on private international law whose chapter 12 regulates arbitration in Switzerland." As such an arbitration body, the CAS is accountable to the provisions of Swiss law.

However, in its history, the CAS has never seen a decision that it has rendered overturned by the Swiss Federal Tribunal. The standing of CAS decisions has thus been absolute -- until now.

The Tribunal's ruling overturned a decision in which CAS upheld a ban imposed on Francelino Matuzalem da Silva, a football player who left FC Shakhtar Donetsk in 2007 on his own accord -- he says the reason was simply to save his marriage. Shakhtar did not recognize the legitimacy of the termination and filed for compensation from Matuzalem under FIFA regulations and the matter was taken to the FIFA Dispute Resolution Chamber, where a decision was given in Shaktar's favor.

Shakhtar was not satisfied with the amount of compensation that FIFA had judged that they were due, so appealed the FIFA DRC decision to the CAS, where a further judgment was given in Shakhtar's favor (details can be found here in PDF).  At this point, the dispute was not over whether Matuzalem had legally severed his contract or whether compensation was owed to Shakhtar, but over the exact amount of that compensation.

Matuzalem did not pay the amount awarded to Shakhtar and was consequently severely sanctioned under FIFA's disciplinary code, a judgment that was subsequently upheld by the CAS. The FIFA sanction was a ban on his ability to play. Matuzalem challenged the sanction under Swiss law, which is how it arrived at the Swiss Tribunal which rendered it's decision a few weeks ago.  Here is how the Tribunal characterized its decision (crudely translated from French):

Francelino da Silva Matuzalem filed an appeal in a civil case in Federal Court against the decision. The review authority of the Federal Court for the substance of CAS Awards is extremely limited, in exceptional cases, an award may be canceled for violation of the essential principles of the legal system, referred to as "order public "(Art. 190. of the Federal Law on Private International Law). A indefinite ban from practicing his profession as a footballer was threatened, due to the FIFA Disciplinary Code, in case he would refuse to pay high damages, which constitutes a manifest and grave violation of human rights and ignores the limits inherent in any contractual agreement. In fact, under the award under appeal, the appellant, if did not give the payment imposed, would be delivered to the arbitrariness of his former employer and his economic freedom would be limited to such an extent that the basis of his economic existence would be endangered...

Where this leaves the amount owed by Matuzalem and the state of sanctions I am not clear.

More broadly, Chappelet tells me that the list of challenges to CAS rulings is a short one:

There have been less than 10 such appeals since the creation of CAS and the Federal Tribunal (FT) has always decided in the favor of CAS except in 5 cases as far as I know:

• - An appeal in 1994 by horse rider Grundel who contested the independence of CAS from the International Equestrian Federation and the IOC. This resulted in the complete revision of the CAS Statute and Regulations and led to the formation of the ICAS, that would from here on out look after the finance and administration of the CAS, a task that was formerly executed by the IOC.
• - An appeal in 2007 by the tennis player Cañas in which the FT ordered CAS to reexamine its ruling to better explain how it had considered Cañas arguments. But this did not change the ruling.-
• An appeal in 2010 by Athletico Madrid who contested a CAS decision in a dispute with Sport Lisboa E Benfica, another major European football club.
• - An Appeal by the International Ice Hockey Federation in 2012 against a decision taken by CAS in favor of the hockey club CP Bern.
• - the appeal by Matuzalem, although it does not seem to be about CAS procedures. Now CAS must not only take into consideration what the sporting rules say but also their "lawfulness"

One point does seem clear, the Swiss Federal Tribunal's judgment to overturn the CAS in the Matuzalem case may establish a precedent -- practically if not jurisprudentially --  that will encourage more parties to appeal to the Tribunal for recourse on CAS decisions. If so, CAS will find itself to no longer be the court of final authority and an entirely new area of sports jurisprudence will have to be settled. Stay tuned.