Pechstein: German Federal Court finds in favour of the International Skating Union (and CAS)

By Prof Dr Steve Cornelius University of Pretoria South Africa

In 2009, the International Skating Union (ISU) banned Claudia Pechstein for two years from all competitions after her blood tests returned abnormal results. After a series of failed appeals to the Court of Arbitration for Sport (CAS) and the Swiss Federal Court, Pechstein then instituted a claim for damages to the amount of approximately €3.5 million against the German Skating Union (DESG) and the ISU in the state court in Munich.

She argued that her suspension was unlawful and that she had suffered damages because she could not participate because of the suspension so that she could not earn any income as a professional athlete. She based her claim mainly on contention that the ISU and DESG constituted monopolies and the that the dispute resolution clause in her participation contract with the ISU did not meet the standards of a fair trial as it excluded the jurisdiction of the ordinary courts of law and provided exclusively for arbitration before the CAS, which would be final and binding. Pechstein based her attack on the CAS on the basis that CAS arbitrators could only be appointed from a panel designated by the International Council for Arbitration in Sport (ICAS).

The ICAS itself consists of 20 members. Four members are appointed by International Federations (IFs), four members are appointed by the Association of National Olympic Committees and four members are appointed by the IOC. These twelve members then appoint four members to represent the interests of athletes. Those sixteen members then appoint four independent members.

Pechstein argued that the ICAS, therefore, mainly represented the interests of the IOC and IFs and even the four members of the ICAS supposedly appointed to represent the interests of athletes, were nominated by the representatives of the IOC and IFs, so that they could hardly be regarded as true representatives of athletes.

Pechstein’s claim was dismissed in the Munich state court. She then took the case on appeal to the higher state court in Munich. Although the higher state court concluded that mandatory arbitration in sport was not, in itself, problematic and did not constitute an abuse of a dominant position, the court concluded that the CAS, due to the composition of the ICAS and the way the members of the ICAS were appointed, could not be seen as independent or impartial.

The ISU then appealed to the German Federal Court which upheld the appeal. The Federal Court also concluded that mandatory arbitration in sport was justified and not, in itself, a reason to find that the ISU had abused its dominant position.

As far as arbitration to the CAS is concerned, the higher state court in Munich had taken a more generalised and holistic view of the matter and concluded that, in general, the CAS is tainted because of the composition of the ICAS which is dominated by IFs and the IOC.

The German Federal Court took a more narrow and case-specific view of the matter. The Court concluded that the composition of the ICAS did not necessarily, in itself, mean that the CAS was not impartial. The dispute in this case involved the ISU and there was no indication that the ISU had an improper influence on the appointment of CAS arbitrators. Nor could it simply be accepted that all the ISU and all other IFs held the same interests, although the court acknowledged that the IOC and all IFs might have a shared interest in the fight against doping in sport, but so do all the athletes. In addition, the fight against doping in sport is an international priority which the United Nations has also recognised.

The German Federal Court also focused on the composition of individual CAS tribunals and the fact that each party to the dispute could select one of the arbitrators on the tribunal. The Court was also of the opinion that the ICAS list of arbitrators showed sufficient diversity to ensure that the parties could make a fair choice to ensure that the tribunal was independent.

In the final analysis, the difference in opinion between the higher state court in Munich and the German Federal Court, essentially came down to a difference of focus. The Court in Munich focused mostly on the composition of the ICAS and concluded that the bias in favour of IFs and the IOC tainted the CAS. The Federal Court focused more on the case at hand and the parties before the Court and concluded that there was no bias in favour of the ISU and, therefore, arbitration before the CAS was beyond reproach.

However, this may not yet be the last word in the matter. There is already talk that Pechstein may appeal to the German Constitutional Court. Only time will tell whether the Constitutional Court will favour the general approach of the Munich Court or the more focused approach of the Federal Court.