On 21 December 2023, the Court of Justice of the European Union (ECJ) handed down several judgments in relation to international sports law. It had to decide on the lawfulness under EU law of the FIFA and UEFA rules subjecting inter alia the envisaged “Super League” to prior approval and control (Case C-333/21), of the rules of UEFA and the Belgian football association on minimum numbers for “home-grown players” (Case C-680/21), and of the rules of the International Skating Union (ISU) on the prior authorization of skating competitions (Case C-124/21 P). While the last judgment in the list seems to have received the least attention so far, it foreshadows potential further conflicts between EU law and international arbitration, which this post will address.
The case of ISU v. Commission arose out of a complaint by two Dutch professional speed skaters and members of the ISU’s Dutch member association to the European Commission. They claimed that the ISU’s prior authorization and eligibility rules violated Articles 101 and 102 TFEU. According to these rules, ice skaters covered by them are essentially prohibited from taking part in any competition the ISU does not organize or authorize. The EU Commission, in turn, considered in a 2017 decision that such rules indeed were in violation of EU competition law and the ISU obliged to end this practice. Further, given that athletes only have the possibility to challenge penalties under the ISU rules by way of CAS arbitration, the Commission considered that the ISU also had to amend its procedural regulations to allow for effective judicial review by courts of EU member states.
The EU’s General Court had still found CAS arbitration not to conflict with EU law in a 2020 judgment (see paras 141-164). But the ECJ now held that subjecting disputes about sport association rules such as the ISU’s solely to CAS arbitration may perpetuate violations of EU competition law. In particular, the Court found that such "rules […] must be subject to effective judicial review" (para. 197). This, according to the ECJ, especially means that the courts reviewing the relevant awards must be entitled to refer questions of EU law to the ECJ under Article 267 TFEU (para. 198).
The ECJ’s ruling bears a strong resemblance to the ECJ’s 2018 judgment in the Achmeacase, where the Court had held that intra-EU investment arbitration on the basis of bilateral investment treaties between EU member states was contrary to EU law. In the same way as in Achmea, also the ISU judgmentappears to be largely motivated by the ECJ’s intention to preserve the autonomy of EU law and its own judicial monopoly over the interpretation of EU law. According to the judgment’s logic, EU courts must have the last word in EU competition law matters.
At the same time, the ECJ extended its prior case law represented e.g. by the 1999 Eco Swiss judgment. In that case, the Court had ruled that member state courts must annul arbitral awards if they find “that the award in question is in fact contrary to Article 81 EC (ex Article 85) [now Article 101 TFEU], where its domestic rules of procedure require it to grant an application for annulment founded on failure to observe national rules of public policy” (para. 41). The ISU judgment adds the element that arbitral proceedings involving questions of EU competition law can only comply with EU law generally if they are seated in a member state.
For CAS proceedings, this creates a dilemma. The seat of the CAS and each CAS arbitration is Lausanne, Switzerland. CAS awards are consequently only subject to review by the Swiss Federal Tribunal – clearly not a court qualifying under Article 267 TFEU for preliminary references to the ECJ, as the ISU judgment requires. So, how could the CAS comply with this dictum? Probably not at all, unless its seat were moved to an EU member state, for which the only recently inaugurated new premises in Lausanne would likely be only one of the smaller obstacles.
Still, not every CAS case will turn on questions of EU competition law. As the German court proceedings initiated by Claudia Pechstein in relation to her doping ban have shown, however, the organization of the international sports system – where usually one international federation and one association per country exclusively regulate a certain discipline – makes arguments based on competition law in any given CAS case not unlikely either (see only the 2015 judgment by the Higher Regional Court of Munich). It may well be that commercial sports disputes in particular may soon rather be brought before arbitral bodies in EU member states – such as the German Court of Arbitration for Sport under the auspices of the German Arbitration Institute (DIS) – instead of the CAS.
At the same time, the reasoning behind the ISU judgment is not necessarily limited to sports disputes. It can easily be transposed to commercial arbitration. Although the ECJ had signaled not to take issue with commercial arbitration proceedings as such in the Achmea case (paras 54-55), it already then emphasized that a review of awards with respect to “fundamental provisions of EU law” by a member state court was necessary.
The ISU judgment’s consequence could then be twofold: On the one hand, EU member states courts might decline enforcement of arbitral awards made outside the EU if the party resisting enforcement can make a case for a violation of EU competition law – or any fundamental provision of EU law for that matter. This should not be a novelty, since such public policy considerations generally play a role under Article V(2)(b) of the New York Convention. What is more, however, courts of EU member states may be inclined to disregard arbitration clauses and nevertheless entertain claims with respect to competition law matters where the contracting parties had originally opted for commercial arbitration outside the EU. These considerations are not only relevant for commercial parties from EU member states. They similarly play a role for parties from third states, since the main criterion for EU competition law to apply is that “trade between Member States” is affected by commercial practices (see Article 101 TFEU).
Overall, it can be said that the ISU decision does not (yet) represent an “Achmea moment” for sports arbitration. The ECJ has not generally outlawed intra-EU CAS arbitration. But the judgment of 21 December adds to the ever-growing line of decisions – most recently the 2023 Semenya judgment of the ECtHR, the 2022 Pechstein judgment of the German Constitutional Court and the judgment in Pechstein and Mutu by the ECtHR – that put pressure on the CAS and CAS tribunals to change their approach, open themselves up to further scrutiny by the general public or, in the case of the ISU, domestic courts other than the Swiss Federal Tribunal. Also sports federations and athletes are well advised to review their contractual arrangements.
At the level of commercial sports disputes as well as commercial arbitration in general, the ISU judgment stresses the limits that fundamental rules of EU law and in particular EU competition law places on the parties’ choice of seat in arbitration clauses. While the German Federal Court of Justice had ruled only in September 2022 that arbitral awards are subject to full review with respect to matters of competition law, the ISU judgment implies that this should be the case in all member states. Simultaneously, even non-EU parties must now consider whether to opt for an arbitral seat within the EU to ensure that the relevant arbitration clauses are respected by member states courts and enforcement of arbitral awards within the EU is not in jeopardy. In that way, the ECJ’s judgment has the potential to seriously endanger Switzerland’s position amongst the most popular seats for arbitration.
These considerations illustrate the considerable tensions that are still developing between the ECJ’s authoritative interpretation of EU law and international arbitration in general. The Luxembourg court’s approach is characterized by its ambition to exercise an all-encompassing level of control over the interpretation of EU law, also by arbitral tribunals. And the Court will very likely continue to claim this control even in constellations that others may view as EU-external. If there is one thing the ECJ does not show, it is self-restraint.