Might a Swiss Court tell WADA it was wrong to go straight to CAS?
The Australian Football League (AFL) is the highest-level professional competition in the sport of Australian Rules Football. As the name suggests, the competition is Australian. Essendon Football Club is Australian. The 34 former and current Essendon players caught in the crosshairs of potential anti-doping rule violations are Australian. The ASADA statute is Australian and so is the statutory prosecuting body. There is no apparent international link.
Yet players caught up in the Essendon supplements saga are now required to defend their livelihoods at a hearing convened by an institution in Lausanne, Switzerland. They have been told that this is because, in anti-doping cases, they agreed to let the World Anti-Doping Agency (WADA) bypass the AFL Appeals Board and go straight to the Court of Arbitration for Sport (CAS).
Accordingly, because WADA has decided to exercise its ‘right’ to go straight to head office without the intervening step of a hearing before the AFL Appeals Board, the 34 players are denied an intermediate step in the appeal process. Should the CAS panel make an adverse finding, its decision on sanctions will be both first instance and final appeal.
Can this be right? Might there be the prospect of the ultimate irony, namely, a Swiss Court (after any adverse finding against the players) striking down WADA’s appeal for being distinctly un-Australian?
Whilst it would take an unlikely chain of events for this to occur, the question leads to some philosophical ‘big picture issues’ about the role of the Court of Arbitration for Sport, the functions of the Swiss Federal Tribunal and the limits of player contracts.
This post will explore these issues, albeit generally, through the prism of a few cases.
Case study 1: Harry “Butch” Reynolds v International Association of Athletics Federations (IAAF)
In some countries, domestic courts have interfered with the resolution of sporting disputes, particularly doping disputes, in a way which has led to intense frustration among influential sporting organisations.
The Reynolds’ case was considered instrumental in the reconstitution of CAS in 1994 and the refinement of its appeal procedures, such was the frustration of the governing body, the IAAF.
Retired judge and Australian CAS arbitrator Hon Dr. Tricia Kavanagh provides an excellent overview in her article “The Doping Cases and the Need for the International Court of Arbitration for Sport (CAS)” (1999) 22 UNSWLJ 721, 723f which also cites the Reynolds case: Reynolds v IAAF 23 F 3d 110 (6th Cir 1994)
To understand why, consider the facts. Butch Reynolds was a 400 metre world record-holder from Akon, Ohio in the United States. In 1990, he tested positive to a banned substance, Nandrolene, at a competition in Monaco. These stories tend to have a familiar ring, except for the bit where Reynolds was awarded $27 million by a United States court. Yes, you read the number correctly.
Here is what happened:
- There was a disciplinary arbitration in England, leading to the IAAF delivering the inevitable sanctions.
- Reynolds sued the IAAF in the US Federal Court, where he argued – as he had in the arbitration – that the testing of his urine sample at a laboratory in France had followed an irregular procedure.
- Reynolds was suspended from competition.
- While his litigation travelled through the US legal system, Reynolds hoped to try out for the 1992 Olympics. However, the IAAF threatened to intervene. After court injunctions and restraining orders, the IAAF backed down. Reynolds qualified for a place as a reserve on the 1992 US Olympic team but the IAAF then banned him from participating.
- With just a hint of the parochial, the Federal District Court of Ohio decided that the positive test was indeed flawed. The court suggested that the IAAF had “purposely avoided the truth”. It awarded Reynolds $27 million.
Ultimately, the United States Federal Court of Appeals set aside the Ohio court decision for being hopelessly flawed. It found that the Ohio court did not have jurisdiction because the dispute had not arisen out of activities in Ohio. Further, since the United States was a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (commonly known as the New York Convention), its courts should recognise and enforce the IAAF arbitration panel award.
This explains why philosophically it can be important to remove sporting disputes from the myopic gaze of the home-town tribunal, so that objective eyes can examine the issues through a different lens.
That said, the policy of courts in Victoria has been to let AFL tribunals adjudicate their own disciplinary cases with as little court intervention as possible: see Australian Football League and Ors v. Carlton Football Club and Gregory Williams [1997] VSC 33; [1997] VICSC 33 (25 July 1997).
Further, when a sporting code like the AFL is wholly domestic (which, in contrast to Reynolds case and others, doesn’t benefit from the enforceability of sanctions at international competitions), there is an interesting discussion about why or whether an international oversight body should have any jurisdiction over it at all. Might so-called objective international oversight – and enforcement – be at the expense of relevant local knowledge?
As to why CAS has any oversight of the Essendon supplements saga at all, it is a result of the AFL’s 2005 decision to sign up to the WADA Code after facing considerable pressure from the Federal Government.
Paul Horvath has a good article explaining the background to the AFL decision to sign up to the WADA Code, see here.
Case study 2: Angela Raguz v Rebecca Sullivan
This is a 2000 New South Wales Court of Appeal decision considered seminal in understanding, amongst other things, the breadth in which athlete contracts are construed in Australia.
Interestingly, CAS (which was a party to the appeal) applied for the case to be removed to the New South Wales Court of Appeal – and agreed to pay the cost of doing so. This is because CAS hoped the dispute would be a vehicle for an authoritative determination of issues of general significance, and so it proved: See Raguz v Sullivan at ¶ 117.
Angela Raguz and Rebecca Sullivan were both judokas competing in the women’s under 52kg category. Raguz was nominated by the Judo Federation of Australia (JFA) to represent Australia at the 2000 Sydney Olympics.
There was a dispute about which judoka best met the nomination criteria because, following what Raguz and the JFA understood to be the Olympic qualifying cut-off-date, Sullivan competed at a further event, boosting her past Raguz in the rankings for their weight category. Accordingly, Sullivan challenged the nomination of Raguz before an internal tribunal of the JFA. When Raguz survived the challenge, Sullivan appealed to a CAS panel which issued an award in her favour. Raguz then sought to appeal the award in the Supreme Court of New South Wales on a question of law.
The case is now important in the context of CAS arbitrations in Australia.
First, the case confirmed that the choice of Lausanne, Switzerland as the seat of all CAS arbitrations meant that its subsequent award should be “not considered as domestic” under Australian law: See Raguz v Sullivan at ¶ 109. Therefore the award must be recognised and enforced in Australia under our legislation implementing the New York Convention – a similar proposition to that advanced in Reynolds. As a consequence, the award could not be subjected to appeal on a question of law under the existing NSW arbitration legislation.
It is no longer possible, under the current uniform Commercial Arbitration Acts, to appeal an award on a question of law. Note also that the Essendon case may or may not satisfy the description of an international arbitration, which might distinguish it from these facts.
Importantly, the court made this finding even though all of the parties to the arbitration (Raguz, Sullivan and the JFA) were resident in Australia, even though the panel (composed of David Grace QC, Hon. Justice Tricia Kavanagh and Malcolm Holmes Q.C.) were all Australian, even though the only hearing in the case was held in Sydney and even though the panel had decided the dispute according to New South Wales law.
This illustrates that, for technical reasons, courts can reach counter-intuitive conclusions.
Secondly, Raguz v Sullivan confirmed that a web of documents and forms including a provision for arbitration (such as typically found in the context of sports competitions) is an enforceable contract. Supporting the likelihood of a contract was the fact that the relevant documentation was variously described by the use of the words ‘agreement’ and ‘form’.
The court held at ¶ 65 that: “The law recognizes that several interlocking documents may evidence or constitute a multipartite contract.”
Importantly, the court found that such a multipartite agreement was enforceable, notwithstanding traditional notions of offer and acceptance. It brought into existence a range of separate and interlocking contractual arrangements between and amongst the AOC, the JFA and individual athletes. In the court’s opinion the relevant arbitration agreement was multipartite. Persons became parties to ‘the agreement’ by conduct, sometimes including acts of signature on documents.
Clearly, CAS got a return on its investment in Raguz v Sullivan. However, it should be noted that NSW Supreme Court decisions are not decisive authority in Victoria. True it is, the AFL is a national code, but the jurisdictional factors point to this being the kind of case typically heard by the Victorian Supreme Court.
In a further twist, Hon. James Spigelman AC, QC, who was Chief Justice of the court which decided Raguz v Sullivan, has been nominated by the 34 Players as a party-appointed arbitrator on the CAS panel which will decide their case.
Case study 3: ASADA v 34 Players
Turning to the Supreme Court of Victoria, followers of the Essendon supplements saga will recall that Justice Clyde Croft decided in 2014 that, because the AFL Tribunal hearing did not constitute a domestic commercial arbitration, subpoenas could not be issued compelling third party witnesses to attend the hearing.
The case is Chief Executive Officer of the Australian Sports Anti-Doping Authority, Australian Football League (ACN 004 155 211) v 34 Players and One Support Person [2014] VSC 635 and can be located here.
The enforceability of the arbitration agreement between WADA and the 34 Players was not considered directly in ASADA v 34 Players, although its contractual framework was given a nod of approval. Apparently persuaded by the reasoning in Raguz v Sullivan, Justice Croft cited the case in a footnote (at p. 7, footnote 5), accepting the legal proposition that: “an arbitration agreement may arise in and as a result of the interplay of the provisions of a suite of documents”.
Yet, as Linda, an experienced commercial lawyer who commented on a previous Social Litigator blog post observed, “The “consent” of the EFC 34 in this case is light years away from the usual contractual agreement to resolve disputes by arbitration:” (Comment by “Linda” to Natalie Hickey. “Essendon Supplements Saga. Is it up, up and away to Switzerland?”, Social Litigator. 25 May 2015).
Justice Croft observed (at para 54) that there is a tripartite agreement between the AFL, the player and the player’s club. The suite of documents making up the agreement includes the Collective Bargaining Agreement between the AFL Players’ Association and the AFL. This, in turn, is incorporated in the Standard Playing Contract with provisions binding the player and his club to its terms. The suite of documents also includes the Laws of Australian Football and the AFL Anti-Doping Code.
He noted that the terms of clause 4 of the AFL Anti-Doping Code acknowledge agreement between the AFL and ASADA, which players and support persons incorporate into the contractual framework.
However, Justice Croft stopped short of concluding that, among what he described as the “web of contractual provisions” binding the players, support persons, the AFLPA, clubs, the AFL and ASADA there is a legitimate, enforceable arbitration agreement between the players and WADA.
Accordingly, it remains an open question as to whether the contract between the players and the AFL is an enforceable one.
Case study 4: Francelino da Silva Matuzalem v Fédération Internationale de Football Association (FIFA)
This case from 2012 illustrates the proposition that a CAS award can be annulled on appeal to the Swiss Federal Tribunal. However the grounds of appeal are extremely limited and apply only when there is a specified procedural irregularity (such as a violation of the principle of equal treatment of the parties) or if the award is incompatible with public policy:
“The substantive adjudication of a dispute violates public policy only when it disregards some fundamental legal principles and consequently becomes completely inconsistent with the important, generally recognized values, which according to dominant opinions in Switzerland should be the basis of any legal order”: at ¶ 4.1.
The facts of the case were as follows: Brazilian soccer player Matuzalem da Silva left FC Shakhtar Donetsk in 2007 on his own accord. The club contested his right to unilaterally sever their employment relationship and requested compensation from him under FIFA regulations.
The case is Francelino da Silva Matuzalem v. Fédération Internationale de Football Association (FIFA), 4A_558/2011, which can be found here.
The request was heard by the FIFA Dispute Resolution Chamber, where compensation was awarded in the club’s favour. Not satisfied with the amount awarded, FC Shakhtar Donetsk appealed the FIFA DRC decision to CAS, where a decision was again made in the club’s favour.
Matuzalem did not pay the compensation awarded to the club and as a result was severely sanctioned under FIFA’s disciplinary code. The FIFA disciplinary sanction was subsequently appealed to a further CAS panel, which upheld the sanction.
The sanction in essence required Matuzalem to pay € 11 million with interest at 5% (€ 550,000 per year) or face the possibility of a total ban from competition, anywhere in the world until the debt was repaid. This raised the spectre of being obliged to repay the debt while being denied the freedom to earn the money from playing.
In deciding that the CAS award should be annulled on grounds of public policy, the Swiss Federal Tribunal decided (at 4.3.4) that such an onerous sanction was way out of proportion with the “abstract goal of enforcing compliance by football players with their duties to their employers”.
It pointed out that instead of imposing a sanction that was a grossly unreasonable restraint of trade, FIFA could have enforced the award against Matuzalem, anywhere in the world, under the existing mechanism of the New York Convention.
At the time of writing, this is the only case in which the Swiss Federal Tribunal has overturned a CAS award. Interestingly, the award ordered a sanction to which the player had “agreed” by contracting into the FIFA system. But it was the fact that this term of the agreement violated public policy which made the award vulnerable to annulment.
Arbitration agreements in the context of a sporting competition can be contained in a suite of documents, which Australian law will enforce as a legitimate contract. We do not yet know how Australian courts view arbitration agreements giving the World Anti-Doping Agency (WADA) but not a player or support person the right to appeal to CAS. Does that kind of agreement violate a fundamental legal principle? It could be a question for the Swiss Federal Tribunal.
Conclusion
The Court of Arbitration for Sport (CAS) has its seat in Lausanne, Switzerland. The ‘seat’ is a very important legal concept when it comes to arbitration. It means a panel with its seat outside Australia can make an award enforceable here under the New York Convention. The award cannot be appealed on a question of law to Australian courts.
Is it possible that an onerous sanction, if made, against 34 Essendon players who likely never thought their case would be heard in Switzerland, could violate Swiss public policy on the grounds that this is an over-reach of Australian domestic jurisdiction? Only time will tell.
James Rowland
James Rowland is an international arbitration counsel who enjoys AFL football and lives in Warsaw.
The Social Litigator 
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