In its decision dated November 9, 2015, the Swiss Federal Supreme Court ruled on whether or not to set aside a CAS award on the grounds that the CAS arbitrator had wrongly accepted jurisdiction.
In its decision dated November 9, 2015 (case no. 4A_176/2015), the Swiss Federal Supreme Court was called upon to decide whether or not to set aside a CAS arbitral award on the grounds that the arbitrator had wrongly accepted jurisdiction to hear the case. The underlying dispute revolves around a claim raised by a football players’ agent (B.) against an Ecuadorian football club (Club A.), the latter of which is a member of the Ecuadorian Football Federation (FEF), which in turn is a member of FIFA.
In July 2011, Club A. had issued a document on its own letterhead, in which Club A. undertook to pay to the players’ agent B. an amount of USD 140’000 in twelve identical instalments of USD 11’666 each, due between August 2011 and July 2012. These payments were said to be for B.’s work as a representative and advisor in connection with sports matters (‘por su intermediación y asesramiento deportivo‘). B., who had also signed the document, was referred to under his signature as a representative (‘representante‘). Subsequently, only two of the twelve instalments were paid to the agent.
B proceeded to file a claim for payment with FIFA’s Players’ Status Committee (PSC), where he requested payment of the outstanding balance of USD 116’660 plus interest. In a decision dated February 25, 2014, the sole judge of the PSC declared that the claim was inadmissible on the basis that B. had not sufficiently established that his activities fell under the scope of FIFA’s Players Agents Regulations (PAR), which inter alia regulate ‘the occupation of players’ agents who introduce players to clubs with a view to negotiating or renegotiating an employment contract or introduce two clubs to one another with a view to concluding a transfer agreement within one association or from association to another’. In this decision, the judge indicated that his decision could be appealed to the CAS, as set out in the FIFA Statutes.
In May 2014, B. appealed the decision to the CAS. Club A. did not respond to the appeal, but indicated in a procedural order that it opposed the CAS’s subject-matter jurisdiction (ratione materiae). In January 2015, the arbitrator ruled on the appeal and rendered his award. Finding that the arbitral tribunal was indeed competent to hear the dispute, the arbitrator granted the appeal, cancelled the decision of the PSC judge and ordered Club A. to pay to B. an amount of USD 116’000 plus interest. In essence, the arbitrator reasoned that it was not contested that B. was a players’ agent who had been terminated and that Club A. had undertaken in a written document to pay USD 140’000 to B., but had failed to pay more than the first two instalments. Whereas Club A. had argued in the proceedings that the services provided by B. were not connected to his professional activity and thus did not fall under the scope of the PAR, the arbitrator concluded that B. had duly proven that the reason for the signed document between Club A. and B. was an activity in connection with B.’s role as players’ agent. The arbitrator came to this conclusion based on the fact that the document mentioned the representation and consultancy services provided by B., as well as based on other indicia, such as the roles of the parties (a players’ agent on one hand and a football club on the other), the fact that the document had been written on Club A.’s letterhead, the use of the word representante, as well as the payment of the first two instalments by Club A. According to the CAS arbitrator, it would have been up to Club A. to show that the document was not connected to B.’s role as a players’ agent. In conclusion, the arbitrator found that the PSC and the CAS were competent to hear the dispute and that Club A. owed USD 116’000 plus interest to B.
In March 2015, Club A. filed a motion to set aside the CAS award to the Swiss Federal Supreme Court, which is the competent court for setting aside proceedings against international arbitral awards in Switzerland. In its motion, Club A. argued that the arbitrator had wrongly accepted jurisdiction to hear the case. According to Club A., the CAS arbitrator would only have been competent to hear the dispute if the activity in question fell under the scope of PAR, but B. had not succeeded in showing that his services did in fact fall under the PAR. Thus, Club A. went on to conclude that the first-instance judge of the PSC had correctly declined his jurisdiction and that the CAS tribunal had incorrectly accepted jurisdiction to hear the case.
In its decision of November 9, 2015, the Swiss Federal Supreme Court confirmed that the CAS arbitrator had correctly accepted jurisdiction to hear the case. In the Federal Supreme Court’s view, the CAS arbitrator had ruled that the document dated July 2011 referred to an activity amounting to that of a players’ agent and thus falling under the scope of the PAR. The Federal Supreme Court further found that the arbitrator’s conclusions based on the factual evidence presented to him were binding on the Federal Supreme Court. Thus, the Federal Supreme Court concluded that the CAS arbitrator had not wrongly accepted jurisdiction by declaring himself competent to hear the dispute and to rule on the appeal filed by B. Club A.’s motion to set aside the CAS award was thus denied.
The Swiss Federal Supreme Court’s decision of November 9, 2015 exemplifies that it can be difficult to successfully challenge an arbitrator’s jurisdiction under the Swiss lex arbitri, in particular where the arbitrator has declared himself competent based on questions of fact. Indeed, the Swiss Federal Supreme Court exercises substantial restraint when deciding on questions of fact which have led an arbitral tribunal to accept jurisdiction over a dispute. For the parties to an arbitral procedure, this will often mean that it will be recommendable to bring jurisdictional challenges as early in the procedure as possible, rather than subsequently trying to argue in setting aside proceedings that the arbitral tribunal lacked jurisdiction.