Article 190(2)(b) Private International Law Act (PILA) provides that an award shall be set aside if the arbitral tribunal wrongly accepted or declined jurisdiction.

The dispute arose out of an employment agreement between a soccer club (A), a member of soccer association (C), and a player (B). The agreement provided the following arbitration clause:

On 15 June 2012, B was transferred to another club for a US$3.5 million payment. Following this transfer, a dispute arose between A and B over the share of the transfer fee owed to its former player.

The player submitted the dispute to the Players' Status Committee of C, claiming an amount of US$2.1 million from A. A raised a jurisdictional objection, contending that the Players' Status Committee of C had no jurisdiction. On 24 August 2012, C declined jurisdiction.

On 1 November 2012, B challenged the decision before the CAS. A once again raised a jurisdictional objection. Alternatively, it argued on the merits that the amount owed to the player should be fixed at US$500,000.

On 31 December 2013, the sole arbitrator of the CAS found that he did have jurisdiction and ordered A to pay US$1.75 million plus interest to B. As to jurisdiction, the arbitrator interpreted the arbitration clause, finding that the reference to the "Players' Status Committee" in the second sentence of the arbitration clause was a reference to the Players' Status Committee of C and not a reference to the FIFA Players' Status Committee, as had been argued by A. The arbitrator also noted that the interpretation relied on by A could potentially expose the player to the risk of not being able to submit the dispute to any tribunal. Furthermore, the arbitrator added that any ambiguity in the arbitration clause had to be interpreted against A, which had been the main drafter of the contract, in accordance with the contra proferentem rule applicable under the governing law.

On 6 February 2014, A filed a petition with the Swiss Supreme Court to have the award set aside for lack of jurisdiction, arguing that under the arbitration clause, an appeal to the CAS was only permissible against either a decision of an arbitral tribunal appointed in accordance with the first sentence of the arbitration clause or against a decision of FIFA. Alternatively, A also contended that the arbitrator ruled extra potestatem by ordering a payment on the merits when the decision to be appealed before him was only a decision on jurisdiction, not on the merits.

The Swiss Supreme Court dismissed the petition.

It confirmed its case law that, under Swiss law, pathological arbitration clauses are not per se invalid, if the parties' intention to arbitrate is clear. Such clauses have to be interpreted and supplemented according to the general rules of contract law.

Applying these principles to the case at hand, the Swiss Supreme Court concluded that the parties' arbitration agreement clearly reflected their intention to arbitrate and to exclude the jurisdiction of state courts. The reference to the "Players' Status Committee" in the arbitration clause was, however, unclear. It could be understood to be either a reference to the Players' Status Committee of C or as a reference to the FIFA Players' Status Committee.

Referring to the arbitrator's detailed analysis of the arguments raised before him, the Swiss Supreme Court reiterated that it had no obligation to review the arguments relied upon by the arbitrator that had not been expressly criticised by the party challenging the award. The court pointed out that A had failed to criticise the arbitrator's reasoning point by point. A had merely elaborated its own interpretation of the disputed wording. Furthermore, the Swiss Supreme Court held that a party challenging an award that is based on different independent, alternative or subsidiary arguments has to show that each and all of these arguments do not withstand scrutiny, which A had failed to do. A had indeed not challenged the arbitrator's application of the in dubio contra proferentem rule and its finding that A's interpretation could potentially deprive the player of any possibility to have the dispute adjudicated by a tribunal.

With regard to A's argument that the CAS had acted outside its jurisdiction by deciding on the merits of the case even though the Players' Status Committee of C had not entered into the merits, the Swiss Supreme Court confirmed its previous case law (see Legal update, Swiss Supreme Court holds that principle of ne bis in idem forms part of public policy) and held that the CAS had not exceeded its jurisdiction.

This decision confirms the Supreme Court's case law regarding pathological arbitration agreements. Such agreements are not, per se, invalid if the parties' intention to arbitrate is clear, as was the case in the matter at hand. The only ambiguity concerned the body before which the dispute had to be brought for a first instance decision, and such ambiguity could be clarified by interpreting the arbitration clause. Furthermore, the case serves as a reminder to counsel challenging an arbitral award before the Swiss Supreme Court that it does not suffice to criticise the challenged award in a general manner by repeating the challenging party's previous line of argument. Rather, the Swiss Supreme Court requires counsel to analyse and criticise the reasoning of the challenged award in detail and to address all the different alternative and subsidiary arguments relied on by the arbitral tribunal.