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Federal Tribunal sets aside CAS award for lack of a valid arbitration agreement
Practical Law Legal Update 3-501-4000 (Approx. 3 pages)
Federal Tribunal sets aside CAS award for lack of a valid arbitration agreement
| Published on 04 Feb 2010 • International, Switzerland |
PD Dr. Nathalie Voser (Partner) and Christopher Boog (Associate), Schellenberg Wittmer (Zurich)
In a recent decision dated 6 November 2009 and published on 24 December 2009, the Swiss Federal Tribunal set aside an award by the Court of Arbitration for Sport (CAS) in Lausanne. The Federal Tribunal held that, although it generally adopted a liberal approach to the validity of arbitration agreements, in the present case the mere fact that the appellant had signed an entry form for a specific tournament was not sufficient to constitute a valid arbitration agreement for disputes outside the scope of such tournament.
Background
Article 190(2)(b) of the Swiss Federal Statute on Private International Law (PILA) permits an arbitral award to be set aside "if the Arbitral tribunal wrongly accepted or declined jurisdiction".
Article 178 of the PILA on arbitration agreements states:
"1. The arbitration agreement must be made in writing, by telegram, telex, telecopier or any other means of communication which permits it to be evidenced by a text. 2. Furthermore, an arbitration agreement is valid if it conforms either to the law chosen by the parties, or to the law governing the subject-matter of the dispute, in particular the main contract, or to Swiss law. 3. The arbitration agreement cannot be contested on the grounds that the main contract is not valid or that the arbitration agreement concerns a dispute which had not as yet arisen."
Facts
The appellant (A) was a member of the German national ice hockey team and had represented Germany at a number of World Championships, as well as the 2006 Olympic Games. On 6 March 2008, he was asked by the German National Anti-Doping Agency (NADA) to participate in an "out-of-competition sample collection". A allegedly refused to undergo the test. However, on the same day he underwent a doping test for the German Ice Hockey Federation (DEB), the result of which was negative.
After being informed by NADA of A's refusal to take their test, the DEB issued A with an official warning and punished him with a fine and community work. The sanction imposed by the NADA and the Word Anti-Doping Agency (WADA) for refusing a doping test was a ban. However, the DEB considered such a sanction excessive in this case. A was subsequently selected to play for Germany at the 2008 World Championship in May 2008. WADA requested the International Ice Hockey Federation (IIHF) to suspend A from the tournament. The IIHF denied the request.
WADA filed an appeal against this decision with the CAS in Lausanne. The CAS accepted jurisdiction based on the fact that A had signed a "Player Entry Form" before each World Championship. The form contained a clause in which the signatory agreed to submit disputes to the CAS in Lausanne.
The CAS overturned the decision of the IIHF and imposed a two-year ban on A. A filed a petition to set aside under Article 190(2)(b) of the PILA, arguing that the CAS had erred in accepting jurisdiction.
The issue before the Federal Tribunal was whether, by signing the Player Entry Form for the 2008 World Championship, A had entered into a valid arbitration agreement (as defined by Article 178 of the PILA) with respect to the present dispute, namely the consequences of his refusal to participate in an out-of-competition sample collection in March 2008.
Decision
The tribunal held, in accordance with general Swiss principles of contractual interpretation, that the arbitration clause in the Player Entry Form had to be construed in such a manner that the parties could and should have understood it in good faith, taking into account the overall circumstances of the case. On that basis, the Federal Tribunal concluded that the arbitration clause contained in the Player Entry Form could not be understood as referring to any and all disputes, but was limited to disputes relating to the specific tournament for which the form was signed. The form had been signed for the 2008 World Championship. Since WADA had failed to show that the doping test of 6 March 2008, and the requested ban, were linked to that tournament, the Federal Tribunal found that there was no valid arbitration agreement with respect to the present dispute.
The Federal Tribunal noted that in previous cases, it had held a global reference to an arbitration clause contained in bylaws or articles of association to be sufficient to create a valid arbitration agreement . Here, though, neither the CAS in its award nor the WADA had shown that there was a sufficient global reference.
Comment
This decision is noteworthy for three reasons in particular:
- First and foremost, it is significant precisely because the Swiss Federal Tribunal so rarely vacates arbitral awards. Recent figures show that only approximately 6.5 percent of all petitions to set aside arbitral awards in Switzerland are successful.
- Second, the decision is a reminder that its liberal approach to interpreting arbitration agreements is not without boundaries. In particular, where, on an objective interpretation of an arbitration agreement, there is nothing to suggest that it is an all-encompassing arbitration agreement, such agreement should not be inferred lightly. Here, there was nothing in either the wording of the arbitration clause contained in the Player Entry Form or the circumstances generally to suggest to A that he was agreeing to arbitration for disputes unrelated to the World Championship to which the form related.
- Third, on the same note, if an arbitral tribunal seeks to base its jurisdiction on a arbitration agreement by global reference, the Federal Tribunal expects the arbitral tribunal to at least state in its award that there was a sufficient reference to the document containing the arbitration clause. Here, while apparently both the WADA and the arbitral tribunal had hinted that the tribunal's jurisdiction derived (also) from the bylaws and other rules of the IIHF, the Federal Tribunal was not convinced that this was indeed the case.