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Are CAS arbitration requirements inconsistent with EU courts?
The General Court of the European Union has reached a conclusion on case number T-93/18 [1] between the International Skating Union (ISU) and the European Commission (EC) that ISU rules concerning the eligibility of athletes who have entered a competition without ISU’s permission violate EU Competition Law.
The Court views that, although the sport governing bodies are making rules to create common standards in the organization, those rules should not unreasonably discourage third parties from participating, and those other organizers should have access to fair and objective events management. In addition, the EU General Court also supports the role of the Court of Arbitration for Sport (CAS) as the main body in resolving sport-related disputes.
Facts and Verdict
In 2014, the European Commission received a complaint from two professional speed skaters, Mark Tuitert and Niels Kerstholt, claiming that ISU’s eligibility rules are inconsistent with Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU).
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The ruling was subsequently made on December 8, 2017, by the European Commission, whereby the Commission had decided that the rules relating to ISU eligibility are inconsistent with Article 101 of TFEU due to the ISU’s objective to limit the participation of independent professional speed skaters in international competitions organized by third parties other than ISU and the Commission. Therefore, the ISU was required to pay a fine to stop the violation by canceling or amending the rules. However, no penalty was defined.
The ISU later appealed the Commission’s decision to the General Court of the European Union. The ISU requested that the ruling be overturned based on one of the arguments that the Commission had argued that the CAS’s arbitration regulations underscore the limitations of the competition. However, the ISU claims that the Commission had incorrectly concluded that the arbitration regulations provide applicants with effective legal protection against judgments that may make it harder to oppose the competition. It was also argued that the Commission did not consider recourse to CAS’s arbitration proceedings which are in violation of Article 101 of TFEU.
In its ruling on December 16, 2020, the Court made the ruling based on the Commission’s decision. In that verdict, the Commission had also taken into consideration that ISU’s Arbitration Rules refer to the exclusive jurisdiction of the Court of Arbitration for Sports (CAS) in Switzerland to hear the appeal and issue the binding award will worsen the situation. This is based on the fact that, in the view of the Athletes Committee, the CAS and CAS-specific arbitration rules and jurisdiction must be accepted, and the arbitration rules make it difficult for athletes to obtain effective judicial protection against the conduct of athletes, which is contrary to Section 101 of TFEU.
Effective action of athletes against Section 101 of TFEU
As part of the main claims relating to the rules relating to the eligibility of the ISU, the Court ruled that the ISU, as a sports federation, is obligated under Article 101 of TFEU and that the ISU must not exclude competition organized by third parties. In addition, the Court also reaffirms that the Commission has the power to oppose the global market limitation for corporate and commercial exploitation of international speed skating under the definition of Article 101 of TFEU.
The Court clarifies that sports agencies can implement a pre-authorization system for competition, but the rules must be fair and proportionate and not unduly deteriorate competition. The EU’s competition laws apply to the actions of sports governing bodies, which often play a bipartisan role as regulators and event organizers.
Later, the Court cited the guidelines of the EU Court of Human Rights in Mutu and Pechstein, which upholds the independence and neutrality of the CAS. It also considers that there is still sufficient means by which athletes and organizers can apply EU law, including the EU competition law, prior to national authorities and national courts to ensure the effectiveness of the competition law. This was to ensure that compulsory arbitration rules will not compromise the effectiveness of the EU’s competition laws. This ruling further affirms CAS’s legitimate role as a ruling sports body.
In light of the ruling, the Court concluded that the European Commission has no right to force the ISU to change its arbitration regulations. Additionally, the Court also viewed the CAS arbitration process does not follow the effectiveness of the EU competition law.
The verdict has not reached its final stages and may still be appealed on the basis of legal issues.
Sources:
- https://globalarbitrationnews.com/cas-arbitration-clause-improper-under-eu-law-the-general-court-of-the-eu-disagrees/
- https://www.cms-lawnow.com/ealerts/2021/01/european-general-court-confirms-that-recourse-to-cas-arbitration-under-sports-federation
- https://www.whitecase.com/publications/alert/eu-general-court-delivers-ruling-application-eu-competition-law-sports
- [1] Judgment of the General Court (Fourth Chamber, Extended Composition) of December 16, 2020, Case no. T 93/18
