15 Jan 2015
Oberlandesgericht München Teil-Urteil AZ. U 1110/14 Claudia Pechstein vs DESG & ISU
On 1 July 2009 the International Skating Union (ISU) imposed a 2 year period of ineligibility on the German Athlete Claudia Pechstein. On basis of all evidence presented in this case the ISU Disciplinary Commission ruled that the Athlete has applied the prohibited method of blood doping.
The Athlete denied the doping allegations and appealed with the Court of Arbitration for Sport (CAS) and the Swiss Federal Supreme Court. All 4 appeals were dismissed and the ban was upheld.
The Athlete started proceedings with the Geman District Court in Munich (Landgericht München I) against the ISU and the Deutsche Eisschnelllauf-Gemeinschaft (DESG). The Athlete claimed damages suffered as a result of a doping ban.
On 26 February 2014 the Munich District Court dismissed the Athlete’s claim but also ruled that the arbitration clause contained in the athletes’ agreement between Pechstein and both the ISU and DESG to be invalid.
The court found that it had jurisdiction to hear the damages claims, and the defendants could not invoke the arbitration clauses. However, the court held that it could not revisit and review the legality of the ban. As it was bound by the CAS findings that the ban was legal, the Athlete’s damages claims were unfounded.
Hereafter the Athlete filed a new appeal against the ISU with the Higher Distict Court in Munich (Oberlandesgericht München).
The Court ruled that international sports federations are monopolists. German doctrine refers to this as the Ein-Platz-Prinzip, which stipulates that in each sport there can be only one federation per geographical level. At least in speed skating, if an athlete wants to make a living from this sport, there is no alternative to the international competitions organised by the governing bodies.
This puts the ISU, organiser of the World Speed Skating Championships, in a dominant position pursuant to the German Act against Restraints of Competition. If athletes want to compete at the international level, they have no other choice but to put up with an arbitration clause that the organising federations include in their registration forms.
Having athletes sign a compulsory arbitration agreement is not per se an abuse of a dominant position because there are good reasons for such an agreement.
The German Court held, however, that the problem lies in a structural imbalance of the CAS. In 2009, when Pechstein signed the arbitration agreement, the CAS Code then in force provided that 3 out of 5 arbitrators were chosen by the sport’s governing bodies, with only two among those persons independent from those bodies.
Furthermore, the court noted that in disputes in which the parties don’t agree on a name, the president of an arbitral tribunal is directly nominated by the president of the CAS Appeals Division, who is himself nominated by the International Council of Arbitration for Sport (ICAS), a body highly dependent on sports associations.
Forcing an athlete to accept an imbalanced arbitral court’s jurisdiction is what constitutes an abuse of market power (and not the arbitration agreement itself).
Accordingly, the Oberlandesgericht refused to recognise the CAS award based on Art. V (2) (b) New York Convention because it violates German cartel law, which is part of the ordre public.
Hence, no res iudicata effect of the CAS award hinders Pechstein from bringing forward claims for damages before German state courts. Therefore the Oberlandesgericht Munich rules on 15 January 2015 that the arbitration agreement was void and the arbitral award could not be recognized.
The Court of Arbitration for Sport (CAS) noted in response that, accourding to the Higher District Court in Munich, the fact that the decisions of the CAS and of the Swiss Federal Tribunal (SFT) were final in Switzerland did not prevent the athlete from bringing a claim for damages before the German courts, in the light of the principles of German competition law which forms part of German public policy.
However, the CAS has also noted that the Higher Court did not consider that making the Athletes’ participation in competitions contingent on their agreement to arbitration in general was an abuse of a dominant position. The Higher Court also mentioned that CAS arbitration does not breach Article 6 para. 1 of the European Convention for Human Rights and recognized the need to have a specialized international tribunal, instead of state courts, ensuring the uniform adjudication of sports-related disputes.
The CAS noted that the findings of the Munich Higher Court are based on the CAS rules and organization in force in 2009, when Claudia Pechstein appealed before CAS, and do not take into account the changes leading to the current organization, with amended procedural rules regarding the nomination of arbitrators, development of the legal aid program and the appointment of new ICAS Members not active in or connected to sports-bodies.
If, like in the Pechstein/ISU case, arbitration agreements were to be considered as invalid by state courts, even when not challenged at any stage during the arbitration, then the basic principles of international arbitration would be compromised.
(SportsAndTaxation.com & Court of Arbitration for Sport)
