In its decision dated March 22, 2016 (case no. 4A_678/2015), 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 tribunal had ruled infra petita and had disregarded a party’s right to be heard. The underlying dispute revolved around a claim raised by a Brazilian football player (B.) against a Portuguese football club (Club A.), the latter of which is a member of the Portuguese Football Federation which in turn is a member of FIFA.
On July 31, 2009, B. and Club A. had concluded an employment contract for the term of August 1, 2009 until June 30, 2014. The employment contract provided for a gross monthly salary of EUR 16’670.00. B. was subsequently lent out by Club A. to another football club until June 30, 2010.
After the end of the Portuguese football championship in May 2010, B. left Portugal to spend holidays in Brazil. A dispute then erupted between the parties, since B. had not returned to Portugal by the beginning of the next season on July 1, 2010. In an e-mail dated July 9, 2010, Club A. informed B. that he would have had to be back by June 28, 2010 or at the latest by July 1, 2010 and that therefore an immediate termination of his employment was justified.
Shortly thereafter, on August 19, 2010, B. filed a claim against Club A. with FIFA’s Dispute Resolution Chamber claiming damages in an amount of EUR 800’160 due to unjustified termination. In its decision dated January 17, 2014, the Dispute Resolution Chamber partly accepted the claim and ordered Club A. to pay EUR 550’000 to B. in damages for breach of contract.
Both parties subsequently appealed the decision to the CAS. In an award dated September 16, 2015, the CAS tribunal rejected Club A.’s appeal and accepted B.’s appeal in part. The CAS tribunal thus amended the Dispute Resolution Chamber’s decision to the effect that Club A. was ordered to pay EUR 550’000 plus interest of 5 % as of August 19, 2010. All other motions were rejected.
Club A. subsequently filed a motion to set aside the CAS award to the Swiss Federal Supreme Court, essentially arguing that some of the prayers for relief which it had filed in the CAS proceedings had not be ruled upon, in particular a motion to set the compensation at a maximum of EUR 229’725 as well as a motion to declare that the compensation was a gross compensation. In addition, Club A. argued that its right to be heard had been infringed upon.
In its decision of March 22, 2016, the Swiss Federal Supreme Court rejected the motion to set aside and confirmed the award. In the Federal Supreme Court’s view, the CAS tribunal had not ruled infra petita, since Club A.’s motion to set the compensation at a maximum of EUR 229’725 had essentially been dealt with by the CAS tribunal when it had set the compensation at EUR 550’000. Beyond that, the Federal Supreme Court also rejected Club A.’s arguments according to which the award did not clarify whether or not the sum of EUR 550’000 was a gross or net sum. In this respect, the Federal Supreme Court took the position that the sum could only be understood as a net compensation.
Aside from rejecting Club A.’s allegation that the tribunal had ruled infra petita, the Federal Supreme Court also rejected Club A.’s argument that the CAS tribunal had violated Club A.’s right to be heard. In particular, the Federal Supreme Court rejected the allegation that the compensation had not been correctly calculated by the CAS tribunal by using B.’s gross salary instead of his net salary. In this regard, the Federal Supreme Court went on to state that the right to be heard does not include a right to a substantively correct decision. In the end, Club A.’s appeal was thus fully rejected.
The Swiss Federal Court’s decision of March 22, 2016, serves as a reminder that a motion to set aside an arbitral award will only be granted under exceptional circumstances. In regard to the parties’ right to be heard, the Swiss Federal Supreme Court even takes the position that the right to be heard does not give the parties a right to a substantively correct decision. For parties to an arbitral procedure, this will often mean that arguments on the substance of a dispute should be brought as early in the procedure as possible, since the Federal Supreme Court will in many cases limit itself to a very limited review of the award. Where the seat of the arbitration is in Switzerland, it will thus often be recommendable to involve Swiss counsel as early in the proceedings as possible.