The future of sports arbitration: the ISU v. Commission judgment and its impact on CAS arbitration


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In the previous blog of the MLL’s Sports Law Blog Series, we delved into the unique aspects of dispute resolution during the Olympic Games and highlighted some notable highprofile cases. In this final part of the three-part series, we take a look at the future of sports arbitration.

On 21 December 2023, the Grand Chamber of the European Court of Justice (ECJ) issued a landmark ruling (C-124/21 P), which could have a considerable impact on the future of sports arbitration, particularly with regard to the Court of Arbitration for Sport (CAS).

This decision underscores the commitment from the highest EU judicial instances – as already demonstrated with the 2018 Achmea decision (C-284/16) – to ensure the effective application of EU law through proper judicial review and therefore undermining the existence of international arbitration

The judgment is expected to have far-reaching implications, particularly in situations where the arbitration clauses of sports federations – such as those providing arbitration before the CAS – are challenged on the grounds of EU law. This development could reshape the landscape of sports arbitration, especially in cases involving EU-related issues.

I. The dispute

The matter concerned a dispute involving the International Skating Union (ISU) and two Dutch speed skaters.

The ISU sets out in its “Constitution and General Regulations“ a number of prior authorisation and eligibility rules for athletes. The two skaters filed a complaint before the European Commission, arguing that the ISU’s eligibility rules conflict with EU competition law – in particular with Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) – since they threaten speed skating athletes with a lifetime ban if they participate in competitions not authorised by the ISU.

In December 2017, the European Commission issued an “infringement“ decision, concluding that ISU’s eligibility rules restricted competition in the light of Article 101 TFEU (Case AT. 40208). Notably, the European Commission highlighted that the ISU’s stipulation requiring any disputes to be resolved through CAS constitutes a hurdle to athletes “in obtaining effective judicial protection”, as the scope and review of EU competition law would be limited in CAS proceedings.

II. The General Court Decision of 2020

The ISU challenged the European Commission’s decision before the General Court of the ECJ (first instance).

In December 2020, the Court issued its judgement dismissing ISU’s appeal concerning the prior authorisation and eligibility rules. However, crucially, the Court upheld the appeal in relation to CAS arbitration. It stated, on that aspect, that the exclusive jurisdiction of CAS to hear disputes related ineligibility decisions made by the ISU might be justified by the legitimate interests tied to the specific nature of sports.

The Court therefore concluded that CAS arbitration does not undermine the full effectiveness of EU competition law, as it does not exclude individuals from bringing actions for damages before a national court or raising complaints regarding a breach of EU competition law.

III. The Grand Chamber Decision of 2023

In its judgment of 21 December 2023, upon appeal by both the ISU and the skaters, the Grand Chamber of the ECJ determined that the arbitration imposed by the ISU on athletes does not guarantee an effective judicial review of EU competition law rules and undermines the protection of rights derived from the direct effect of EU law, as well as the effective compliance with Articles 101 and 102 TFEU.

The ECJ emphasised that the prerequisite for an effective judicial review – regarding EU competition law, as in the case at hand – includes the possibility of requesting a preliminary ruling from the ECJ, regardless of the place of establishment of the sports federation (with the ISU being based in Lausanne, Switzerland).

Considering that CAS awards can only be reviewed by the Swiss Federal Tribunal (as explained in our first blog), and not by EU courts or ultimately the ECJ, the Grand Chamber considered that the use of arbitration does not allow for an effective review of compliance with the EU competition rules and annulled the General Court’s decision on this issue.

IV. What’s next?

This ECJ Judgement presents some similarities with the Achmea decision, according to which the ECJ ruled that arbitration clauses provided in intra-EU bilateral investment treaties are incompatible with EU law due to lack of effective judicial review from the ECJ. The analogy seems quite evident with the ISU judgement. Yet, the ECJ has not provided any guidance as to what can be implemented within the sports dispute resolution scene, namely the CAS.

So, what is next for sports disputes concerning EU law issues? Can they still be referred to CAS arbitration?

The immediate implications of the ECJ ruling could be twofold: Firstly, it sets a precedent that may lead to further legal challenges against CAS decisions, particularly in cases where athletes argue their rights under EU competition law have been violated. This could result in increased litigation surrounding CAS awards within EU member states, as national courts might be compelled to review these awards more critically. Secondly, national courts within the EU may be reluctant to enforce arbitral awards issued outside the EU – such as those from CAS – if a party raises concerns about a violation of EU competition law or other fundamental EU provisions. In this context, national courts may also be tempted to disregard CAS arbitration clauses altogether, while retaining jurisdiction over competition law issues.

This ruling could also prompt sports bodies to reconsider how they draft their arbitration clauses and eligibility rules to avoid conflicts with EU law. While the long-term implications remain uncertain, steps are already being taken to protect CAS’s role in sports arbitration. One example is UEFA’s decision of June 2024 to designate Dublin (Ireland) as an alternative seat for CAS arbitration concerning disputes under its Authorisation Rules. This move ensures that Irish courts, and ultimately the ECJ, can provide an effective judicial review of EU competition law matters.

This certainly means that sports federations shall be mindful to provide effective judicial review mechanisms in relation of questions of EU competition law in their regulations.

Nevertheless, it remains to be seen whether such measure sets the trend for other sports federations to also designate Dublin (or another European city) as an alternative seat of CAS arbitration or whether UEFA’s example will remain a “ flash in the pan“.

Series:

Part 1
Part 2


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