1. April 2022

Arbitration Newsletter Switzerland: Bundesgericht bestätigt den CAS Entscheid gegen den ehemaligen Präsidenten des CBF, mit welchem diesem lebenslang sämtliche fussballbezogenen Tätigkeiten verboten wurde

On 23 March 2022, the Swiss Federal Supreme Court (the „Supreme Court„) published a new decision in the field of international arbitration (the „Decision„)¹ dismissing the action for annulment of the former president of the Brazilian Football Confederation („CBF„), Ricardo Teixeira, against a CAS award of 14 September 2021.²

In the award, CAS had confirmed a lifetime ban from all football-related activities and a fine imposed on Teixeira by the FIFA Ethics Committee for bribery in connection with the awarding of rights to cover various South American football competitions.

1. Facts

Teixeira had been the president of CBF as well as a member of the FIFA Executive Committee and the Executive Committee of the Confederación Sudamericana de Fútbol (CONMEBOL). In 2012 he resigned from his various positions.

After an investigation by the Investigatory Chamber of the FIFA Ethics Committee („FEC„), the FEC Adjudicatory Chamber found Teixeira guilty of having accepted bribes of approximately USD 7.7 million in connection with the awarding of rights to cover the three South American football competitions „Copa Libertadores„, „Copa America“ and the „Copa do Brasil„. In a decision dated 26 July 2019 the FEC Adjudicatory Chamber banned him for life from any football related activity on national and international levels and, additionally, imposed a fine of CHF 1 million, due to a violation of the FIFA Code of Ethics.

On 20 December 2019, Teixeira filed an appeal with the Court of Arbitration for Sport („CAS„) against this decision.

A three-member arbitral tribunal, composed of Hendrik Willem Kesler (President), Rauf Soulio and Luigi Fumagalli, dismissed the appeal and confirmed the decision of the FEC by an award dated 14 September 2021.³

2. Considerations of the Supreme Court

2.1 Alleged Violation of the Right to be Heard

Teixeira argued that his right to be heard had been violated by the CAS as it had failed to address certain relevant issues. Namely, he argued that the CAS had not taken into account that he had resigned from all his functions in the field of football at the beginning of 2012 and, therefore, subsequent events would not be covered by the FIFA Code of Ethics.

The Supreme Court held that, according to case law, an arbitral tribunal has a minimum duty to examine and deal with the relevant issues. This duty is violated when, through inadvertence or misunderstanding, the arbitral tribunal fails to take into account allegations, arguments, evidence and offers of evidence presented by one of the parties, which are important for the award to be rendered.

The burden of proof in this respect lies on the allegedly aggrieved party that has to show how an oversight by the arbitrators prevented it from being heard on a relevant point. The allegedly aggrieved party has to establish both (i) the failure of the arbitral tribunal to examine the facts, evidence or legal elements put forward and also (ii) that these elements were of such a nature as to influence the outcome of the dispute.

If, however, relevant elements are completely ignored in the award, it is the arbitrators‘ or the respondent’s task to justify this omission in their response to the action for annulment. They may do so by demonstrating that, contrary to the appellant’s assertions, the omitted elements were not relevant for the outcome or, if they were, that they were implicitly rejected by the arbitral tribunal.

The Supreme Court found in casu that the CAS award showed that the arbitrators had taken Teixeira’s arguments into consideration and had rejected them at least implicitly. Accordingly, Teixeira’s right to be heard had not been not violated.

The Supreme Court finally noted that Teixeira, using the pretext of an alleged violation of a right to be heard, was attacking the CAS‘ reasoning in an attempt to obtain a substantive judicial review of the award. This could not be assessed by the Supreme Court because the question as to whether the reasoning of the award was convincing does not form part of a party’s right to be heard.

2.2 Alleged Violation of Public Policy

Teixeira further argued that the disciplinary sanction imposed – the lifetime ban and the fine – would be incompatible with public policy as the sanction would be disproportionate and violate his personal rights as protected by Article 27(2) of the Swiss Civil Code („CC„).⁴

The Supreme Court held that an award is incompatible with public policy if it disregards the essential and widely recognized values which, according to the prevailing conceptions in Switzerland, should form the basis of any legal order. This is the case when it violates fundamental principles of substantive law to such an extent that it can no longer be reconciled with the relevant legal order and system of values. It is not sufficient that a reason given by an arbitral tribunal violates public policy; it is the result of the award that must be incompatible with public policy.

Arbitrariness, being a broader concept than public policy, is hence not sufficient. According to case law, a decision is arbitrary when it is manifestly untenable, seriously disregards a clear and undisputed legal norm or principle, or shockingly offends the sense of justice and fairness; it is not sufficient that another solution seem conceivable, or even preferable.

The Supreme Court also noted that a violation of Article 27(2) CC does not automatically violate substantive public policy – it must be a serious and clear case of violation of a fundamental right.

The Supreme Court also reiterated that, in matters of disciplinary sanctions in the field of sport, it will only interfere if the sanction led to a manifestly unjust result or a shocking inequity.

Applying these principles to the case at hand, the Supreme Court found that Teixeira had failed to show how the result reached in the award was contrary to public policy.

It held, in particular, that Teixeira had neither established nor showed with probable cause that the sanction imposed would actually jeopardize his economic existence. 74 years old Teixeira had, by his own choice, quit his activities in the field of football in 2012. In addition, despite the sanction, Teixeira retained the possibility of carrying out professional activities in other sectors.

Accordingly, the Supreme Court rejected the action for annulment to the extent it was admissible.

3. Conclusions

The Decision does not contain any surprises as the Supreme Court has confirmed its established case law on the right to be heard and on public policy.

The Decision, however, is a reminder that the Supreme Court understands the concept of public policy to have a very narrow scope. Unsurprisingly, the chances of success to annul an award for an alleged violation of public policy are very limited.

In fact, the hurdles which must be overcome in order to successfully annul an award, in particular with regard to an alleged incompatibility with public policy, are very high. The average⁵, success rate of approximately 8% proves this beyond any doubt. In addition, it is more than noteworthy that since 1989 only two international awards have been set aside based on a violation of public policy, and in both cases, the underlying facts were rather particular.⁶

The Decision also shows that attempts to attack the tribunal’s reasoning on the merits through the back door by alleging a violation of a party’s right to be heard will not do the trick.

Finally, the Decision also prompts a comment on a more formal, but for our international readers, important issue: following a recent revision of Article 77(2bis) of the Federal Supreme Court Act, parties may also file their submissions in annulment proceedings against arbitral awards with the Supreme Court in English and that is exactly what FIFA had done, while Teixeira filed his submission in French.

The Supreme Court, however, renders its judgment in any case in an official language of Switzerland, i.e. German, French, Italian, or Romansch, and never in English. As a rule, the judgment is rendered in the language of the decision being challenged. As the CAS award was rendered in English, thus not an official language, the Supreme Court used, in accordance with usual practice, for the decision the language used in the action for annulment (in casu French).

 

 

2022-04-01-Thouvenin-Arbitration-Newsletter-4A_542_2021.pdf (pdf 375 kB)