Swiss Federal Tribunal sets aside CAS award for lack of jurisdiction
Dr. Martin Bernet and Sonja Stark-Traber, Schellenberg Wittmer (Zurich)
In a German-language decision dated 3 May 2010 and published on 2 August 2010, the Swiss Federal Tribunal set aside an arbitral award rendered by a tribunal of the Court of Arbitration for Sports (CAS), after finding that the tribunal lacked jurisdiction to hear a marathon runner's appeal against a doping ban.
Article 190(2) of the Swiss Federal Statute on Private International Law (PILA) permits a (final or partial) arbitral award to be set aside for a limited number of reasons listed in Article 190(2)(a) to (e).
A successful marathon runner (Y), was tested positive for banned substances in a doping analysis after competing in the Seoul International Marathon in March 2006. On 25 April 2006, he was provisionally suspended from all competitions by the national athletics federation of his country (X), which is a member of the International Association of Athletics Federations (IAAF). On 10 September 2006, X commenced its first disciplinary hearing. After a number of adjournments, a further hearing was held before a newly constituted disciplinary commission on 11 December 2008. By letter of the same date, X informed Y that the disciplinary commission had unanimously found that Y had committed a doping violation and that Y had been banned from all competitions from 25 April 2006 until 11 December 2008. The commission further held that Y had forfeited all prizes and benefits gained from his participation in the Seoul Marathon 2006.
On 7 January 2009, Y appealed the decision of the disciplinary commission to the CAS, mainly on the ground that the decision violated section 18.104.22.168.2.2 of the World Anti-Doping Agency (WADA)'s Code International Standard for Laboratories by having the same analyst test both samples. X objected to the jurisdiction of the CAS, arguing that neither X's constitution nor the pertinent IAAF Anti-Doping Rules provided Y with the right to appeal the matter to the CAS.
The CAS found that its jurisdiction could not be based on either X's constitution or on the IAAF Anti-Doping Rules. However, the CAS assumed jurisdiction based on a letter dated 10 April 2008 from Dr. C, the IAAF Anti-Doping Administrator, addressed to Y's counsel. In the letter, Dr. C offered to settle the dispute for a two-year ban subject to Y's acceptance of an anti-doping rule violation. He further stated the following:
"I would remind you that the decision that will ultimately be taken by the relevant disciplinary commission of [the national athletics federation] after 16th May will still be subject to an appeal to the Court of Arbitration for Sport in Lausanne, on your initiative if you disagree with it or on the initiative of IAAF, if the decision is not in accordance with the IAAF Rules. This will inevitably lead to a costly and lengthy arbitration procedure until the final award is rendered by CAS."
Y rejected the offer made by Dr. C, but relied on the letter to establish the jurisdiction of the CAS. The CAS construed Dr. C's letter as an offer to enter into a specific arbitration agreement in the sense of Article R47 of the Code of Sports-related Arbitration. The CAS found that Y could in good faith rely on the offer made to him by the IAAF, and that he accepted it by filing his appeal to the CAS.
The CAS further found that X was aware of the Dr. C's letter and accepted the appeal procedure proposed by Dr. C on behalf of the IAAF. Given the exceptional length of the disciplinary proceedings and the ongoing communication between X and the IAAF, the CAS also found that Y could in good faith infer from the behaviour of both the IAAF and X that they did not wish him to appeal at a national level, but to file an appeal directly with the CAS. The CAS further stated that the decision taken by X's disciplinary commission did not contain any indication as to the applicable appeal procedure nor a denial of the IAAF's letter, and that Y could therefore in good faith rely on the fact that this silence meant the approval of Dr. C's letter.
Consequently, the CAS held that it had jurisdiction to hear the appeal filed by Y. The CAS also found in Y's favour on the merits of the dispute and set aside the decision of the disciplinary commission.
X filed a petition with the Swiss Federal Tribunal to set aside the CAS award under Article 190(2) PILA, arguing that the CAS lacked jurisdiction to rule on the matter.
The Federal Tribunal set aside the CAS award.
At the outset, the Federal Tribunal found that X, as the national federation responsible for the prosecution of doping offences, had a legitimate interest in filing a petition for setting aside the CAS award, thus preventing Y from collecting the prize money won at the Seoul Marathon 2006 which had been withheld by the marathon organisers. The fact that X as member of the IAAF had certain duties in the disciplinary proceedings, the disregard of which could lead to sanctions by the IAAF, did not mean that X lacked the personal interest in the outcome of the case required for the filing of a petition with the Federal Tribunal.
The Federal Tribunal then analysed whether Dr. C's letter on behalf of the IAAF could, according to the principle of good faith (Vertrauensprinzip), be construed as an offer to arbitrate under Swiss law. It stressed that a declaration could only be interpreted as an offer if it sufficiently demonstrated the declaring party's will to be bound in the event of an acceptance of the offer. The Federal Tribunal considered that the introduction of Dr. C's letter ("I would remind you that") could not be understood as a declaration towards the addressee to enter into an obligation to arbitrate, but as a mere reference to the appeal procedure applicable in the view of the author. Also, the further wording of the passage at issue ("will be subject to an appeal", "[t]his will inevitably lead to a costly and lengthy arbitration procedure", "final award is rendered by CAS") merely indicated that the author had a certain perception of the applicable appeal procedure, and that he intended to draw the addressee's attention to the adverse consequences of a potential challenge, such as costs and duration of the proceedings.
The Federal Tribunal found that the letter simply referred to the appeal procedure according to the applicable procedural rules. By contrast, an offer to submit the appeal to arbitration instead of the ordinary appeal procedure could not be inferred from the letter. In the view of the Federal Tribunal, the letter did not contain any indication that would have allowed the addressee to assume that the author wanted to enter into a binding commitment in that respect.
The Federal Tribunal further found that not only the wording but also the surrounding circumstances did not allow Dr. C's letter to be construed as an offer to arbitrate. It found that the letter was rather an offer to bring a close to the lengthy disciplinary proceedings, but not a double offer to refer the dispute to the CAS for arbitration in the event that the offer to terminate the proceedings was declined. Dr. C's reference to the CAS jurisdiction was held to be a mere warning as to the costs and duration of such proceedings, which should prompt Y to accept an anti-doping rule violation against the assurance of the minimum sanction. The Federal Tribunal further stated that the CAS' jurisdiction could also not be derived from a missing indication in the decision of the disciplinary commission as to the applicable appeal procedure.
Given that Dr. C's letter could therefore not, in good faith, be interpreted as an offer to arbitrate, Y could not accept any offer by filing the appeal with the CAS. Therefore, there was no arbitration agreement, which would have allowed Y to appeal the decision of the disciplinary commission to the CAS.
The Federal Tribunal further examined whether the CAS had to assume jurisdiction on a different legal basis, more specifically, whether Y was at the time of the doping offence an "International-Level Athlete" in the sense of the IAAF Anti-Doping Rules, which would have allowed him to appeal to the CAS on the basis of Article 60.11 of the IAAF Competition Rules. According to the IAAF Handbook, an "International-Level Athlete" is "an athlete, who is in the Registered Testing Pool for out-of-competition testing or who is competing in an International Competition under Rule 35.7". Y, who was undisputedly not in the Registered Testing Pool, argued that the Seoul Marathon 2006 qualified as an "International Competition" in the sense of this provision, even though it was not on the 2006 IAAF list of International Events, but was listed as an international event in the following years only, in particular at the time the CAS proceedings started in 2009.
The Federal Tribunal endorsed the view taken by the CAS that the qualification of an event as "International Competition" and thus of the status of an athlete as "International-Level Athlete" was not merely a procedural issue, but a matter of substantive law relevant for the rights and obligations of an athlete in the framework of the IAAF Anti-Doping Rules. The Federal Tribunal therefore refused to retroactively apply the qualification as "International Competition" to the Seoul Marathon 2006.
Finally, the Federal Tribunal also denied the applicability of the principle of lex mitior as provided for in Article 25.2 of the WADA World Anti-Doping Code. According to the lex mitior principle, new legal provisions apply retroactively to doping offences committed prior to their coming into force, where they provide for less severe sanctions than the former provisions. The Federal Tribunal underlined that this principle only applies to sanctions for doping offences, but not to changes of other substantive provisions, which have an indirect effect on the applicable appeal procedure.
As a result, the Federal Tribunal held that the CAS did not have jurisdiction to hear Y's petition and annulled the CAS award.
For only the fifth time, the Swiss Federal Tribunal has set aside a CAS award in this case. This decision was rendered only a month after the Federal Tribunal overturned a CAS award on public policy grounds, because it violated the principle of res judicata (see decision 4A_490/2009 of 13 April 2010, reported in Legal update, Swiss Federal Tribunal sets aside CAS award for violation of procedural public policy (www.practicallaw.com/5-502-9576)). However, these decisions do not mean that the Federal Tribunal is more inclined to set aside CAS awards than previously. When analysing Dr. C's letter, the Federal Tribunal merely applied the generally recognised principles of interpretation of contracts, finding that the CAS had gone too far in its interpretation of the letter. The rules and principles applying to setting aside actions to the Federal Tribunal therefore remain unchanged.
The national athletics federation was represented in the appeal proceedings before the Swiss Federal Tribunal by the authors of this article.