Arbitration clause in athlete agreement void

In 2009, Claudia Pechstein was imposed a 2-year ban by the world federation ISU for doping, although no positive sample was present. The ban, which was later confirmed by the International Court of Arbitration for Sport (CAS), was based solely on excessively high and fluctuating reticulocyte values, which in the opinion of the federation and the court could only be explained by doping. At that time, Pechstein was unable to provide proof to the contrary.

Claudia Pechstein subsequently sued the world federation before the Regional Court (LG) Munich for damages. Due to the prohibition on practising her profession, she had suffered damages of approximately 4.4 million euros. The ban imposed was unlawful because the fluctuating blood values were attributable to a genetically determined anomaly, as evidenced by an expert opinion.

Already the Regional Court (LG) Munich considered the athlete agreement between Pechstein and the world federation ISU, whereby in the event of disputes they must submit to the arbitration of the CAS, to be void due to breach of mandatory competition law. However, since the appeal against the ban was factually conducted before the CAS, the court of first instance saw itself bound by the CAS's decision.

The court's decision

The Higher Regional Court (OLG) Munich has now overturned this decision by means of an interlocutory judgment of 15.01.2015 (Az. U 1110/14 Kart.). In the court's view, not only is the arbitration clause void on competition law grounds, but the CAS award is also not capable of recognition. The requirement of the arbitration agreement as a prerequisite for participation in international competitions is to be regarded in the present case as an abuse of the dominant position of the world federation. Due to the one-place principle prevailing in the system of sports associations, it has a monopoly position in the organisation of international competitions.

According to the court, the associations have a "structural imbalance" with regard to the composition of the arbitral tribunal, because due to their influence on the appointment of the tribunal, there is a possibility that the arbitrators are selected with a view to the case to be decided and the person affected. This undermines the confidence of the legal claimant in the impartiality and objectivity of the arbitral tribunal.

The court has not yet ruled on the damages claim itself on grounds of procedural economy. First, revision against the interlocutory judgment was admitted to the Federal Court of Justice (BGH), which the association announced immediately. Should the BGH confirm the judgment of the Higher Regional Court (OLG) Munich, the damages claim would then be heard. In the course of these proceedings, the ISU would then be called upon to prove the doping allegation in order to justify the ban. If this fails, the way would be clear for compensation of the damage suffered by Pechstein as a result of the ban. According to her own calculations, this amounts to approximately 4.4 million euros.

Conclusion

The judgment is noteworthy because it clarifies the obvious fact that sports law disputes are also subject to ordinary courts of law, insofar as general applicable law and not merely association-internal sports rules relating to sport are affected. The rule-making power of sports associations has its limits where it no longer concerns the regulation of sports activity as such. Sport therefore does not take place in a legal vacuum, but is subject to the same rules as any other economic activity. The decision – provided it is confirmed by the BGH – is to be welcomed unreservedly, because it strengthens the rights of athletes who, in case of dispute, can bring their matter before independent state courts.

The decision could represent a significant turning point in the system of sports associations and thus in sport in general. In almost all sports associations, there are more or less serious violations of competition law in the regulations, which may be more easily challengeable in the future. A negative exemplary case of highly questionable rules is e.g. the FIS – see ourContribution of 16.10.2014.