Arbitrability of a contractual dispute between a football player and a club in case of insolvency proceedings
4A_200/2021 judgment of 21 July 2021 A v. B & C, motion to set aside the CAS award CAS 2019/A/6404 & 6405
This is a relatively interesting judgment that discusses the arbitrability of disputes linked to insolvency proceedings. The dispute between a Romanian football club (the Club) that fell into bankruptcy in 2016 and two football players (the Players) led to an appeal to the CAS in 2019 against the decisions rendered by the internal bodies of the Romanian Football Federation (RFF). The insolvency proceedings were terminated and the Club resumed its activities in 2020, i.e., before the issuing of the CAS award, which partially upheld the Players’ appeals and led to a motion to set aside the CAS award before the SFT proceeding filed by the Club.
As a side note, the Players filed their request for extension of the deadline for the filing of their reply to the motion by electronic mail only (i.e., not signed by an electronic signature in accordance with the Swiss Federal Tribunal Act) and as such their request was considered invalid, while their reply was filed after the deadline expired and was therefore disregarded by the SFT, as was the reply filed by the CAS (at 3.1-3.2).
Before the SFT, the Club first invoked the lack of the jurisdiction of the CAS, to the extent that insolvency proceedings are of a mandatory nature and therefore not arbitrable under Romanian law. The SFT recalled that arbitrability is a condition for the validity of the arbitration agreement and, under Swiss law, includes all disputes of pecuniary nature. Despite the fact that Swiss enforcement law is a matter of public policy, the case at hand involved two football players with pecuniary claims against their former club, thus falling within Art. 177 Swiss LDIP. The SFT also considered as decisive the fact that the Club had become solvent again prior to the issuance of the arbitral award, rendering thus any questions regarding the exclusive state jurisdiction irrelevant (at 4.4).
The plea of violation of res judicata for alleged disregard of the decision of the insolvency administrator and the subsequent withdrawal of the players’ challenge against such decision was swiftly dismissed because it was formulated within the context of the panel’s lack of jurisdiction (and not as part of an alleged violation of procedural public policy) but also as clearly unsubstantiated (at 4.4 in fine).
In the same judgment, the SFT reminded that the double level of jurisdiction is not a matter of procedural public policy and that there is a difference between violation of public policy and arbitrariness, which is only a ground for annulment of an arbitral award in domestic arbitration under the Swiss Code of Civil Procedure (at 5.2).
The SFT reminded that the double level of jurisdiction is not a matter falling under the scope of procedural public policy
Note: the full Judgment is available in French at the website of the Swiss Federal Tribunal www.bger.ch. The English translations of important international arbitration decisions rendered by the Swiss Federal Tribunal (from French, German and Italian) are available on the website www.swissarbitrationdecisions.com , operated jointly by Dr. Despina Mavromati and Dr. Charles Poncet as a service to the international arbitration community.