Multiple World and Olympic champion German speed skater, Claudia Pechstein puts the Court of Arbitration for Sport to perhaps its greatest test to date. 

How the case ‘broke away’:

Lap 1: During the period between 4 February and 30 April 2009, Ms Pechstein had been the subject of numerous in-competition anti-doping controls, none of which had resulted in an adverse analytical finding for a prohibited substance. In the same period, the International Skating Union (ISU) had collected in excess of 90 blood samples from Ms Pechstein as part of its blood profiling programme, sufficient to compile a ‘biological passport’ for her.  This enabled the ISU to monitor changes to Ms Pechstein’s biological character, making it easier to detect the effects of any use of prohibited substances. Subsequent analysis of blood samples collected from Ms Pechstein at the World Championships in Hamar in February of 2009 were deemed to be inconsistent with her biological passport and, on 1 July 2009, the ISU issued a decision finding Ms Pechstein guilty of blood doping.  The ISU imposed a two year ban on her, with retrospective effect from 7 February 2009.

Lap 2: Ms Pechstein appealed the ISU’s decision to CAS, relying on the arbitration agreement that was included as part of her license and also formed part of the competition conditions imposed upon her by her national and international skating federations. At a hearing four months later, her appeal was dismissed by CAS.

Lap 3:  Not satisfied with the ruling from CAS, Ms Pechstein launched a further appeal to the Swiss Federal Tribunal, seeking cancellation of the CAS decision (to uphold the two year ban) and seeking a re-hearing at CAS, where she hoped to present new evidence that her abnormal blood results were due to a genetic blood disorder.  At a hearing on 10 February 2012, the Swiss Federal Tribunal denied Ms Pechstein’s requests.

Lap 4:  Frustrated by the sports resolution process, Ms Pechstein launched an action for damages (in the region of €4.4 million) before her local civil court in Munich (Landesgericht).  The Munich court held that the arbitration agreement signed by Ms Pechstein was unlawful because, in order to be able to compete in ISU competitions, Ms Pechstein had no other option but to sign the agreement. The court held that this was contrary to the European Convention on Human Rights (in particular Article 6 -  the right to a fair trial).  Notwithstanding this finding, the Court still rejected Ms Pechstein’s claim since she had not contested the competence of CAS when she had first appealed the ISU’s decision.  The Court therefore felt bound to recognise the CAS award’s res judicata effect and the CAS decision was duly upheld under the New York Convention.

Lap 5:  Her last throw of the dice came in appealing the Landesgericht decision to the Munich Higher Regional Court (Oberlandesgericht) and the latter court’s decision was handed down on 15 January 2015. This time, the Court overturned the first instance decision, finding that the arbitration clause between Ms Pechstein and the ISU was contrary to German anti-trust law which is part of German public policy.  Its reasoning was based on the premise that international sports governing bodies are to be considered as monopolies because they control international sports competitions that no professional athlete, if he or she wants to make a living, can afford to miss. German anti-trust law prohibits undertakings in a dominant position from imposing contractual conditions that are more restrictive than the norm and the fact here that the ISU required Ms Pechstein, as part of the arbitration agreement, to defer exclusively to CAS to the exclusion of the ordinary courts fell within such a prohibition.

 So why did this make a difference?

This ruling made a key difference because, having found Ms Pechstein’s arbitration agreement with the ISU to be in breach of German anti-trust law and thus incompatible with German public policy, the Munich Higher Regional Court refused to recognise the CAS award under Article V(2)(b) of the New York Convention[1] and deemed the original ISU decision to be void.  As a result, subject to the Higher Regional Court’s decision being overturned on appeal by Germany’s highest civil court (the Bundesgerichtshof), Ms Pechstein’s guilt could now fall to be re-examined by the German Courts. If she were eventually to be exonerated of doping, a claim in damages might follow against the ISU.

Why is this potentially a problem for CAS?

The decision potentially has profound implications for CAS as an arbitral institution and for the many national and international sports federations that rank amongst its most frequent users.  If other national courts were to follow the Munich Higher Regional Court’s lead by refusing to recognise CAS awards, re-litigating the merits of cases and then handing out punitive damages awards against sports organisations, it would surely sound the death knell for CAS as an institution and for the international sports arbitration system as we know it. 

But how likely is all this to happen? 

The Higher Regional Court’s decision acknowledged in fact that an arbitration clause imposed by a sports’ governing body does not constitute per se an anti-trust violation. To the contrary, the Court expressly found that there are good reasons for requiring athletes to sign arbitration agreements, based on the specific need to find quick solutions in disputes arising between athletes and sports governing bodies. 

The main problem for the Higher Regional Court lay  in the composition of the CAS list of arbitrators and the way in which CAS panels are routinely constituted.  In particular, the court disapproved of the fact that, at the time of Ms Pechstein’s case, CAS had a closed list of arbitrators. This pre-defined list was appointed by the International Council of Arbitration for Sport (ICAS), a body which is comprised of 20 members, 12 of whom are nominated by the IOC, and 3/5 of the arbitrators on the list at the time were appointed upon proposals made by sports governing bodies. Moreover, the chairperson of each CAS panel was appointed by the president of the Appeals Arbitration Division who himself was nominated by ICAS.  This all led the Munich Higher Regional Court to conclude that CAS is institutionally biased in favour of sports governing bodies and against athletes.

The position of the CAS list has already changed since the time of the Pechstein case.  As from 1 January 2014, the ICAS is no longer bound to appoint a certain number of arbitrators proposed by federations but is free to appoint whomever it wishes, provided they have appropriate legal training, recognised competence with regard to sports law and/or international arbitration and have a good knowledge of sport. 

The Future of CAS

Some commentators have heralded the Munich Higher Regional Court decision as the new ‘Bosman’, a decision that is capable of bringing world sport to its knees.

The authors think this unlikely even if the significance of the Munich Court’s ruling should not be taken lightly.  CAS has already sought to address some of the perceived institutional weaknesses it has and, if further tweaks to the system are required, then we feel sure that these too will be made in good time.  Whilst this institutional reform goes ahead, CAS nonetheless continues to perform a vital function in international sport.  As the Munich Higher Regional Court itself recognised, CAS offers an expedient, flexible and expert recourse for settling disputes in the sporting field.   This is an institution that must be preserved, not destroyed.