They all lived together in a little crooked house (or not)

By Prof Dr Steve Cornelius International Sports Law Centre University of Pretoria South Africa

The German case of SV Wilhelmshaven eV/Norddeutscher Fußball-Verband eV involved a football club, SV Wilhelmshaven (Wilhelmshaven), that had been ordered by FIFA to pay training compensation to two Argentinian clubs in respect of a player who had learned his skills as a junior player at these clubs.

Wilhelmshaven consistently refused to pay the training compensation.

It first took the FIFA decision on appeal to the CAS, which confirmed the finding of FIFA in respect of both claims.  Wilhelmshaven did not take the CAS ruling on appeal to the Swiss national courts.

A FIFA disciplinary committee eventually imposed fines on Wilhelmshaven and, after further fines, forfeiture of league points and relegation of its team to a lower league, as well as a further unsuccessful visit to the CAS, Wilhelmshaven decided to refer the dispute to the German national courts and to fight the forfeiture of the league points as well as the relegation to a lower league.

The State Court in Bremen ruled that the awards made by the CAS against Wilhelmshaven and the fact that Wilhelmshaven had failed to take the CAS awards on appeal to the Swiss courts, precluded the club from challenging the decisions of the FIFA disciplinary committee and the resultant imposition of the penalties before the German courts.

On appeal, the Higher State Court in Bremen ruled that the imposition of disciplinary measures by the NFV was unacceptable in German law because it served as a mechanism for the implementation of the CAS award and the FIFA decision which was contrary to Article 45 of the Treaty on the Functioning of the European Union to which the NFV was subject.

The applicant’s case was primarily based on the premise that the decision of the NFV to relegate the applicant’s first team and essentially enforce the FIFA decisions and CAS awards was not lawful, because the relevant FIFA regulations, and, consequently, the FIFA decision and the CAS awards, violated the free movement of workers within the EU and was, therefore, under the German law against the public interest. The integrity of neither the FIFA dispute resolution chamber and disciplinary committees, nor the CAS, was challenged as such.

The essence of the judgment in the Wilhelmshaven case is that sports authorities in Germany, like all other persons and businesses, are subject to German law and the EU law. Sports authorities in Germany cannot merely enforce decisions of sports bodies that are based in Switzerland and, therefore, not directly subject to German law and the authority of the EU, without having regard to the principles of German law and the law of the EU.

Therefore, it is not surprising that the Court was prepared in the Wilhelmshaven case to hear the matter. It was, after all, a German football club that opposed the decision of a German sports federation in a German court. The dispute before the court did not deal, in the first instance, with the decisions of FIFA and the findings of the CAS – these were only incidental to the dispute.

On further appeal to the German Federal Court, this last matter became the crucial issue on which the judgment turned. The Court did not address the question whether the order to pay training compensation was contrary to Article 45 of the Treaty on the Functioning of the European Union and left this matter open.

On the contrary, the court based the dismissal of the appeal on the principle that a parent association makes rules only for its members. Wilhelmshaven was a member of the NFV. It was neither a member of the DFB, nor of FIFA. The mere fact that the NFV was a member of the DFB or that the DFB was a member of FIFA, was irrelevant. The Court explained that an association makes rules only for its members. The mere fact that the NFV was a member of the DFB and that the DFB was a member of FIFA, did not provide the legal basis on which the FIFA decision could be enforced against Wilhelmshaven. It also did not warrant a conclusion that Wilhelmshaven had submitted themselves to the disciplinary jurisdiction of FIFA. This aspect turned out to be the decisive factor on which the German Federal Court concluded that the compulsory relegation of Wilhelmshaven by the NFV was not appropriate. The rules of the NFV also did not empower the NFV to impose an enforced relegation because Wilhelmshaven did not pay the training compensation as ordered.

The appeal was, therefore, dismissed and, at least as far as Germany is concerned, Wilhelmshaven was not obliged to pay training compensation.

This case has serious implications for International Federations (IFs), such as FIFA. The crux of the judgment is that IFs can only impose disciplinary measures on their own subordinate members. IFs, therefore, cannot impose sanctions on clubs that are affiliated only to the subordinate members of the IFs. This effectively denies IFs having any disciplinary jurisdiction over clubs that are affiliated to National Federations.