Decision 4A_520/2021 of 4 March 2022, in French
Arbitration Newsletter Switzerland: Eine weitere Entscheidung im FIFA-Gate: Gibt es Grenzen bei Mehrfachernennungen eines Schiedsrichters in CAS Verfahren?
On 30 March 2022, the Swiss Federal Supreme Court (the „Supreme Court„) published a new decision in the field of international arbitration (the „Decision„),1 dismissing an action for annulment of a CAS award of 31 August 20212 against the former president of the Brazilian Football Confederation („CBF„), Marco Polo Del Nero („Del Nero„).
The Decision deals with a case in the context of FIFA Gate. Its focus lies on the independence and impartiality of arbitrators that are frequently nominated by the same party; in addition, the Decision briefly deals with an alleged violation of the right to be heard.
Del Nero had been the vice-president of CBF between 2012 and 2015 and its president from April 2015 until 15 December 2017 as well as a member of the FIFA Executive Committee and the Executive Committee of the Confederación Sudamericana de Fútbol (CONMEBOL).
Del Nero was involved in the bribery scheme concerning the sale of media marketing rights for several football tournaments that have become known as FIFA-Gate.3
On 25 April 2018, the FIFA Ethics Committee („FEC„) found Del Nero guilty of several violations of the FIFA Ethics Code, including bribery, and sentenced him to a fine of CHF 1 million and a lifetime ban from any football-related activity, both nationally and internationally. Upon Del Nero’s appeal, the FIFA Appeals Committee confirmed the decision.
Del Nero filed an appeal with the Court of Arbitration for Sport („CAS„) against this decision. In his appeal, Del Nero nominated Martin Schimke as arbitrator and FIFA nominated Massimo Coccia („Coccia„). After the parties had agreed to jointly nominate the chairperson, they failed to reach an agreement so that CAS on 24 July 2019 appointed Mark Andrew Hovell („Hovell„) as chairperson according to Art. R54 CAS Code.
In connection with his appointment, Hovell filed a declaration of independence („First Declaration„) in which he stated that he was the chairperson in one other ongoing CAS case involving FIFA.
On 2 October 2020, Hovell, in other arbitration proceedings, in which Del Nero’s counsels were involved, disclosed that he had acted or was acting as arbitrator in several other proceedings in which FIFA was a party.
Eleven days later, in a video conference hearing on 13 October 2020, Del Nero requested that the arbitrators submit updated declarations of independence concerning other cases involving FIFA.
On 16 October 2020, in an updated declaration of independence („Second Declaration„), Hovell declared that he was involved in numerous other cases in which FIFA was a party and provided a list of the ongoing ones. In the Second Declaration, Hovell also disclosed that his law firm had recently advised FIFA on a matter involving data protection.
On 23 October 2020, Del Nero lodged a challenge against Hovell. On 26 October 2020CAS informed the parties that the challenge was premature because Hovell had not yet answered a request by Del Nero for more information. After CAS had on 27 October 2020 provided the parties with additional information obtained from Hovell („Third Declaration„), on 3 November 2020 Del Nero re-filed the challenge, which the Challenge Commission of the International Council of Arbitration for Sport rejected on 10 May 2021.
In the award dated 31 August 2021, CAS partially upheld the FEC’s decision, confirming the fine of CHF 1 million but reducing the lifetime ban of the then 80-year-old Del Nero to a 20-year ban. On 6 October 2021 Del Nero filed an action for annulment of this award with the Supreme Court.
2. Considerations of the Supreme Court
Del Nero attacked the CAS award arguing that (i) Hovell lacked independence and impartiality, and (ii) his right to be heard had been violated:
2.1 Alleged lack of Independence and Impartiality
Before the Supreme Court, Del Nero argued that Hovell was not independent and impartial because in total he declared that he was sitting as an arbitrator in 26 cases in which FIFA was a party and because in his First Declaration, he had concealed the fact that his firm was advising FIFA in a data protection matter.
In its considerations, the Supreme Court confirmed its case law that the parties and their counsel have a „duty of curiosity“ (in French „devoir de curiosité„), meaning that they may not solely rely on an arbitrator’s general declaration of independence and impartiality, but rather have an obligation to make inquiries to ensure that the arbitrator is indeed independent and impartial.4
The Supreme Court then held that the knowledge of a party’s counsel is to be attributed to said party. In the Supreme Court’s view, Del Nero thus had been aware of the fact that Hovell was involved in other CAS proceedings to which FIFA was a party and that Hovell’s firm had been advising FIFA in a data protection matter since 2 October 2020. In the Supreme Court’s view, for Del Nero to have fulfilled his duty of curiosity, he would have had at least to have requested further clarification of the disclosed facts within the seven days stipulated by Art. R34 CAS Code. Because Del Nero raised the issue only eleven days after his counsel had learned of the relevant facts, the Supreme Court considered Del Nero’s objection to being belated, resulting in a forfeiture of his right to object.
The Supreme Court then went on to hold that even if Del Nero’s objection had been permissible, it would have been without merit. The Supreme Court based this conclusion on two main considerations:
First, it dealt with the number of Hovell’s appointments. 5 In this respect, the Supreme Court found that Hovell’s practice to disclose only ongoing cases and not to regularly inform the parties of new cases in which one of the parties was involved was inadequate. However, in the Supreme Court’s view, the information initially not disclosed by Hovell was not enough for a successful challenge for the following reasons:
- Without further incriminating circumstances, the fact alone that an arbitrator violates his duty to disclose is not sufficient for a successful challenge;
- There were no indications that Hovell consciously intended to withhold information from the parties;
- For the question of independence and impartiality, not all proceedings in which FIFA is a party and in which Hovell sat as arbitrator were relevant, but only the ones in which he had been nominated by FIFA. This was the case in only three of the proceedings in the last three years.
- In the Supreme Court’s view, Del Nero generally was not overly concerned with repeated nominations, since Coccia, the arbitrator nominated by FIFA, had already been appointed by FIFA six times in the last three years and Del Nero had not objected to this.
In its reasoning, the Supreme Court in particular took into account that the sports arbitration system established by CAS has special features, including a closed list of arbitrators, which is reflected in Footnote 5 to Article 3.1.3 of the IBA Guidelines on Conflicts of Interest in International Arbitration („IBA Guidelines„).6
Second, the Supreme Court dealt with the data protection advice rendered for FIFA by Hovell’s firm. It concluded that for the following reasons, the engagement of Hovell’s firm by FIFA was insufficient to call Hovell’s independence and impartiality into question:
- The data protection advice was a one-off matter and was unrelated to the case decided by CAS;
- The data protection matter concerned an area of law totally unrelated to the arbitration proceedings;
- Hovell was not the contact person for FIFA in the data protection matter;
- The amount paid by FIFA for the services in the data protection matter represented only a tiny fraction of the firm’s fee turnover.
2.2 Alleged Violation of the Right to be Heard
Del Nero further argued that his right to be heard was violated because the tribunal had failed to take into account evidence regarding the inadmissibility of notes which had been confiscated by the Brazilian and US authorities during an allegedly illegal search of premises in Rio de Janeiro.
In dealing with Del Nero’s argument, the Supreme Court held that according to its 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, and evidence presented by one of the parties, which are important for the award to be rendered.
The Supreme Court concluded that the tribunal had diligently dealt with the admissibility of the confiscated notes, in particular, because it held that it would have considered the notes as admissible evidence even if they had been obtained in the course of an illegal search. As a result, the Supreme Court denied any violation of Del Nero’s right to be heard and dismissed his action for annulment.
3.1 Football, FIFA, and their figures at CAS
FIFA recognized the jurisdiction of CAS in 2002. Up to 2020, CAS had decided on 1,199 football-related cases. The second-largest number of cases had originated from athletics (170 cases), followed by cycling (95 cases) and by weightlifting (50 cases). All three sports had recognized CAS jurisdiction earlier than FIFA. Football is therefore by far the largest customer of CAS. 7 FIFA also annually contributes 1.5 million Swiss Francs to the costs of CAS and – apart from the International Olympic Committee (IOC) with an annual contribution of 7.5 million Swiss Francs – it seems to be the only sports federation that financially supports CAS.8
Finally, it seems that FIFA generally does not pay any arbitration costs in advance when it acts as Respondent in procedures before CAS.9
In short, FIFA is in a special position at CAS – and this in various aspects.
3.2 The figures of Hovel
It is not entirely clear in how many CAS cases involving FIFA Hovell had acted as arbitrator in the three years preceding his appointment.10 Del Nero argued that it was 40 cases. Hovell was of the view that the only cases which should be considered were those in which he had been nominated by FIFA, and that this had happened in only three cases, considering that some eleven cases were consolidated to just three cases.11
The CAS Challenge Commission held that Hovell had sat on 26 cases in which FIFA was involved and that Hovell had been nominated by FIFA as an arbitrator in only three of these cases.12
It is, however, doubtful whether the differentiation between nomination by FIFA and nomination by CAS is relevant – it would at least not be in commercial arbitration. No one would expect a chairperson to sit in several cases involving a large company and, at the same time, allow such a chairperson to be nominated as a party-appointed arbitrator three times by the same large company. Footnote 5 to Art. 3.1.3 of the IBA Guidelines may serve as an exemption. Nevertheless, it is difficult to imagine – at least for an arbitrator sitting on commercial cases – that a sports arbitrator acting in 26 cases within three years, all of them involving FIFA in one way or another, can manage his decision-making in a completely independent way.
Finally, the Supreme Court failed to draw an important line: was Hovell appointed before or after the respective consolidations took place? In the first case, the various nominations should be counted individually, and only in the second case, the consolidated cases should be considered as one case.
3.3 The ongoing commitment of a CAS arbitrator to disclose
Art. R33 (1) CAS Code imposes an ongoing commitment upon every CAS arbitrator to disclose „any circumstances which may affect his/her independence with respect to any of the parties.“ This ongoing commitment corresponds to the duty imposed upon any arbitrator sitting in international arbitration in Switzerland by Art. 179 (6) PILA.
It is beyond any doubt that Hovell had failed to have done so because it took him three different declarations to disclose fully his involvement with FIFA. The Challenge Commission of CAS was also clear in its judgment since it criticized Hovell in this respect. It was wrong to disclose only pending cases, rather he had to regularly inform all the involved parties in the proceedings when he accepted a new mandate, where one of the parties in earlier proceedings was involved. With the high number of cases in which CAS arbitrators specialized in football are involved, this continuous duty for disclosure may be rather burdensome. However, the CAS Challenge Commission is right in reminding us that there is no way of avoiding this formality.
3.4 The deadline to challenge an arbitrator at CAS
Art. R34 (1) CAS Code imposes a very rigid 7-day period, within which challenges must be brought. Absent a different agreement by the parties to the contrary, the new Art. 180a (1) PILA allows a challenge within 30 days of the date on which the challenging party becomes aware of the grounds for challenge.
The 7-day period was the formal reason why the Supreme Court dismissed the challenge regarding the lack of independence of Hovell through his multiple FIFA-related appointments. It is, nevertheless, noteworthy that the CAS Challenge Commission had not seen any disregard for these seven days because it had even rejected Del Nero’s application on 23 October 2020 as it considered it premature and had subsequently invited Del Nero to re-file such application once Hovell had provided further information in his Third Declaration. This occurred on 27 October 2020. From this perspective, the challenge of Del Nero on 30 November 2020 occurred within the 7-day limit.
It is surprising that the Supreme Court, in determining the 7-day period, applied a more rigid standard than the CAS Challenge Commission. But at least it made the effort to provide as an alternative also its arguments on the merits.
Generally, the Supreme Court does not disclose the identity of the parties in its decisions and, in arbitration matters, the names of the arbitrators sitting on a particular case are not made public either. It is therefore difficult to understand why the identity of Hovell was disclosed in the Decision, particularly because the Supreme Court did not see any lack of independence on Hovell’s side. This is in contrast to a very recent decision of the Supreme Court13 in arbitration matters where the chairperson on 28 April 2021 signed an agreement to join a law firm that regularly advises one of the parties in the arbitration as a key client in matters of arbitration and litigation (but not in the case in question) and where the award was rendered on 15 August 2021 only. The plea for lack of independence of the chairperson was dismissed by the Supreme Court because the arbitral tribunal could establish that it had rendered its final decision on 5 February 2021 already. Nevertheless, this new case has some very specific features – as has the Decision. Why name and shame Hovell but not this chairperson?
The Decision is not wrong. Obviously, by giving weight to footnote 5 of Art. 3.1.3 of the IBA Guidelines, it can serve as a basis to legitimize Hovell’s multiple appointments. Nevertheless, the circumstances of this case, revealing significant numbers of multiple appointments, leave some doubts – at least to an arbitrator sitting in commercial arbitration cases.
Finally, has there ever been a thought spent on the users‘ perspective? As we all know, independence is a matter of perception and not of proof. But how can we reasonably impose upon an athlete or sports official appearing at CAS a more lenient perception of independence? Food – hopefully – for thought!
Regarding the repeated or multiple appointments of an Arbitrator, see also our Newsletter of 14 November 2012.
Footnote 5 reads as follows: „It may be the practice in certain types of arbitration, such as maritime, sports or commodities arbitration, to draw arbitrators from a smaller or specialised pool of individuals. If in such fields it is the custom and practice for parties to frequently appoint the same arbitrator in different cases, no disclosure of this fact is required, where all parties in the arbitration should be familiar with such custom and practice„
See also BGE 144 III 120, RFC Searing (Belgium) vs. FIFA.
See our Newsletter of 4 April 2018
According to a research on the CAS case law data base (https://jurisprudence.tas-cas.org), of the cases published in the data base, Hovell has overall been sole arbitrator or president in 22 cases involving FIFA and co-arbitrator in 13 cases.
Consid. 5.2.4 of the Decision.
Consid. 5.5 of the Decision.
See decision 4A_462/2021 of 7 February 2022.
2022-04-20-Thouvenin-Arbitration-Newsletter-4A_520_2021-2.pdf (pdf 361 kB)