One of the most notable characteristics of arbitration before the Court of Arbitration for Sport (“CAS”) is that its procedural rules determine an exclusive seat, in Lausanne, Switzerland[1]. This implies that the judicial review of its awards will be submitted exclusively to the Swiss Federal Tribunal (“SFT”), regardless of whether the parties or the dispute is linked to other States. However, this traditional feature has been analyzed and questioned in the Judgment of the Court of Justice of the European Union (“CJEU”) in the case International Skating Union (“ISU”)[2] v Commission (C-141/21 P) (the “Judgment”)[3].
Factual Background
The CJEU Judgment is the latest decision rendered in the dispute that was brought against ISU by two professional skaters before the European Commission, who claimed that ISU’s rules on (i) prior authorization for the organization of international skating competitions[4], and (ii) eligibility of athletes to participate in skating competitions[5], constitute restrictions on free competition under Articles 101 and 102 of the Treaty on the Functioning of the European Union (hereinafter “TFEU”).
According to the rules of this sport federation, ISU’s decisions on the above two matters could only be challenged before CAS. In this regard, the athletes denounced that this limitation of the forum for dispute resolution reinforced the alleged restrictions to competition, since those wishing to challenge ISU decisions do not have a different option, being – in practice – subject to the exclusive and mandatory jurisdiction of CAS.
Prior to the CJEU Judgment, two relevant decisions were issued. First, on December 8, 2017, the European Commission (Case AT.40208[6]) found that the ISU rules constituted a restriction on competition contrary to EU law, and that the referral to the CAS reinforced such restrictions. Subsequently, on December 16, 2020, the EU General Court (Case T-93/18[7]) confirmed the existence of the restrictions on competition identified by the Commission but dissented from the Commission with respect to the CAS arbitration.
For the General Court – contrary to the Commission – the submission of these disputes to CAS did not reinforce the restrictions on competition as it did not infringe the right to a fair trial, was justified in pursuing a legitimate interest related to the specific nature of the sport, and did not deprive the parties of other legal remedies, such as claiming damages before national courts or filing complaints before the Commission or national competition authorities.
The athletes and the European Elite Athletes Association filed a cross-appeal before the CJEU against this point. In its Judgment, the CJEU concluded, first of all, that the ISU rules at issue constitute restrictions on free competition. Furthermore, it reversed the General Court’s decision regarding CAS arbitration as it considered that under the particular context and conditions generated by the ISU rules, the submission of disputes on eligibility and pre-authorization to CAS reinforced the restrictions on competition.
Decision: Judicial review of CAS awards does not protect EU public policy
At the outset, it should be noted that the reasoning of the Judgment on CAS arbitration is limited to the specific case only. The CJEU does not question the existence, organization or functioning of the CAS as an arbitration body, nor does it question the “mandatory” and exclusive nature of this arbitration. Rather, its questions focus on the “legal immunity” created by ISU in its rules, to prevent its decision-making and sanctioning powers from being analyzed in a forum other than CAS.
Indeed, the CJEU identifies the disputes that are submitted to CAS in the specific case, namely: (i) the organization and marketing of international speed skating competitions, and (ii) the participation as professional athletes in such competitions. As these economic activities fall within the scope of EU competition law, a matter of public policy, effective judicial review of the decisions is indispensable.
Such judicial review implies that the judges or courts competent to hear challenges against CAS arbitral awards concerning the two aforementioned disputes must have the power to analyze the compatibility of the arbitral decision with Articles 101 and 102 TFEU, as well as the power to refer a question to the CJEU on matters of EU law, when necessary.
The problem arises with regard to the judicial review of CAS awards because, having its sole seat in Switzerland, it is the exclusive competence of the SFT, which is a court of a non-EU State. In this sense, it does not enjoy any of the judicial powers mentioned above, which prevents it from duly ensuring the compatibility of the awards with the EU public policy. For the CJEU, the control of the award by the SFT is the central point of its challenges, as clearly stated in the Judgment (paragraph 191):
“Furthermore, as follows from paragraphs 181 and 184 of the present judgment, those rules are at issue, in the present case, not to the extent that they subject the review at first instance of decisions issued by the ISU to the CAS as an arbitration body, but only to the extent that they subject the review of the arbitral awards made by the CAS and the last-instance review of decisions of the ISU to the Tribunal fédéral (Federal Supreme Court), that is to say, a court of a third State.”
The fact that the General Court did not stop to analyze whether this effective judicial control is complied with was what prompted the CJEU to change the previous decision and reaffirm – as did the Commission – that under the circumstances raised, the submission of ISU decisions to the exclusive jurisdiction of the CAS reinforces the identified restrictions to competition.
Impact of the decision and final reflections
The CJEU decision has caused a great stir in international sports arbitration, but its possible effects have not yet been fully assessed. In the short term, this decision implies for ISU the obligation to modify its rules in order to provide a forum other than CAS for the submission of eligibility and pre-authorization disputes falling within the scope of EU law. In the meantime, interested parties will be free to defend their rights before EU national courts.
In other words, arbitration agreements referring to the CAS set out in regulations such as those issued by the ISU will partially lose their binding character. Naturally, this is not the case for all other disputes. As the Judgement states, its effects only extend to the matters analyzed in the specific case. But beyond that, the Judgment sends an implicit message, according to which any dispute that is linked to EU public policy cannot be submitted exclusively to CAS arbitration, as long as the control of its awards is submitted to the SFT.
Some voices have suggested that this could motivate the CAS to modify its regulations in order to make its seat more flexible[8]. However, this is an unlikely alternative, since this type of dispute does not represent a significant percentage of the matters that are submitted to the CAS. A cost-benefit analysis regarding the flexibility of the choice of arbitral seat could be detrimental to the CAS, considering that the SFT has consolidated a jurisprudence respectful of its awards; and this experience could be lost by submitting the annulment of awards to the courts of other States.
[1] Code: Procedural Rules – R28 Seat:
“The seat of CAS and of each Arbitration Panel (“Panel”) is Lausanne, Switzerland. However, should circumstances so warrant, and after consultation with all parties, the President of the Panel may decide to hold a hearing in another place and may issue the appropriate directions related to such hearing.”
[2] The International Skating Union (ISU) is the international federation that regulates the competitive disciplines of ice skating, including figure skating and speed skating.
[3] Judgment Of The Court (Grand Chamber), 21 December 2023, International Skating Union v Commission, Case C-124/21 P.
[4] International Skating Union, Communication No. 1974, Open International Competitions, October 20, 2015.
[5] International Skating Union, Constitution and General Regulations 2022.
[6] Commission Decision of 8.12.2017 relating to proceedings under Article 101 of the Treaty on the Functioning of the European Union (the Treaty) and Article 53 of the EEA Agreement, Case AT.40208 – International Skating Union’s Eligibility rules.
[7] Judgment of the General Court (Fourth Chamber, Extended Composition), 16 December 2020, Case T‑93/18.
[8] ISU v Commission: Arbitration as a Reinforcement of Infringements of EU Competition Law: https://competitionlawblog.kluwercompetitionlaw.com/2024/01/09/isu-v-commission-arbitration-as-a-reinforcement-of-infringements-of-eu-competition-law/
