A guide to the Higher Regional Court’s decision in the Pechstein case

On 15 January 2014, the Higher Regional Court in Munich (Oberlandesgericht München) issued a partial award in the long running proceedings of Claudia Pechstein vs. the International Skating Union that calls into question the current system of dispute resolution in sports, and the jurisdiction of theCourt of Arbitration for Sport (CAS) in Lausanne, Switzerland.¹

In an interview for LawInSport, Christian Keidel, counsel for the International Skating Union, explained to us the backgound to the case, the reasons behind the Higher Regional Court’s recent decison, and the likely next steps.

Background

In December 2012, Ms. Pechstein filed a claim at the Regional Court in Munich for damages in the amount of EUR 4.4 million against the International Skating Union (ISU)² based on the allegation that a two-year doping ban handed down against her in 2009 had been invalid. She filed the claim before the state court even though (i) she had signed in her athletes’ admission form an agreement that any dispute with the ISU be submitted exclusively to the CAS and settled definitively in accordance with the Code of sports-related arbitration (the “Arbitration Agreement”); and, (ii) the CAS had already heard and rejected her appeal against the doping ban in 2009 (see CAS 2009/A/1912),³ a decision that was later confirmed by the Swiss Federal Tribunal.⁴  

Decision of the Court of first instance

The Court of first instance deemed that the Arbitration Agreement in the athletes’ admission form was “forced” on Ms. Pechstein, as she had no choice but to to sign the form in order to be able to to participate in ISU competitions. The Court held that such “forced“ arbitration agreements in favor of CAS are void, finding that CAS arbitration does not meet all requirements of Article 6 of the European Convention on Human Rights⁵ (right to a fair trial), in particular as regards the requirement for the independence of the tribunal. The Court based this finding in particular on the following two points:

1. There is a closed list of arbitrators, of which only 1/5 are appointed taking into account the athlete's interests, without the athletes having a formal right to propose arbitrators for the list. This, according to the Court, unlawfully institutionalizes the predominance of sports federations.
2. The chairman of three-arbitrator panel in appeal proceedings is appointed by the President of the CAS’ Appeals Division. The Court found this questionable because the appointment procedure is not sufficiently transparent, meaning the parties are unable to tell why a particular arbitrator has been appointed as chairman.

Nevertheless, the Court of first instance ultimately decided to reject Ms. Pechstein's claim under the “res iudicata” principle, i.e. that they were precluded them from hearing the matter again because it had already been judged by the CAS, which had found Ms. Pechstein’s doping ban to be valid. The Court held that it was obliged to recognize the CAS award in accordance with Article V of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards⁶ (“the New York Convention”).

In respect to the recognition of the CAS award, the first instance found that Ms. Pechstein would be hindered from raising the argument of an alleged invalidity of the arbitration agreement, as she herself had initiated the proceedings before the CAS without ever raising any objection against such agreement, thus implicitly approving its validity.