Claim of violation of due process rejected by the Federal Tribunal
From materials available on the internet, this decision date May 31st, 2012, appears to involve the Honduran football player David Suazo. Suazo originally played for a Honduran club, Deportivo Olimpia. In 1999 he was transferred to the Italian club Cagliari pursuant to a June 1st, 1999 contract, which reserved the right of Deportivo Olimpia to obtain additional payments should the player be transferred to another club.
In June 2007, Suazo was indeed transferred to the Italian club AC Milan for € 14’000’000. This caused quite a fuss in Italy because the player had just been announced as a transfer to Inter Milan, AC Milan’s rival.
Deportivo Olimpia filed a claim for payment pursuant to the June 1st, 1999 contract and in March 2010 the FIFA Players’ Status Committee ordered Cagliari to pay USD 2’514’723. An appeal was made to the CAS.
The CAS Panel (Efraim Barak chairman, with arbitrators José Juan Pinto and Michele Bernasconi ) rejected the appeal on September 15, 2009 and Cagliari appealed to the Federal Tribunal. As you will notice, no lawyer represented the Club but it is obvious that the appeal had been prepared by Swiss counsel.
The following may be of interest in the opinion:
(i) The Federal Tribunal confirms its previously stated opinion that a party taking the view that the right to be heard (Swiss parlance for due process) was violated must raise the issue in the arbitral proceedings immediately and give the arbitral tribunal an opportunity to remedy the violation (see section 3.1 of the opinion in this respect).
(ii) A party failing to do so forfeits the right to raise the argument of a violation of due process in front of the Federal Tribunal (see section 3.2 of the opinion in this respect).
(iii) Should an arbitral tribunal decide to assess the evidence available by anticipation (on the basis of what the arbitral tribunal has already heard) and consequently reject a request for the introduction of new evidence, the Federal Tribunal will review that part of the award only from the limited point of view of a possible violation of public policy. This means that in effect the decision will not be reviewed at all (see section 4.1 of the opinion in this respect).
Judgment of May 31st, 2012
First Civil Law Court
Federal Judge Klett (Mrs.), Presiding
Federal Judge Kolly
Federal Judge Kiss (Mrs.),
Clerk of the Court: Hurni.
Represented by Dr. Andreas Käser,
A.a Club X.________ (The Appellant) is a football club based in A.________ (Italy).It is a member of the Italian Football Federation which belongs to the Fédération Internationale de Football Association (FIFA) since 1905, a non-profit corporation organized under Swiss law (Art. 60 ff ZGB2), which is based in Zurich.
Club Y.________ (the Respondent) is a football club based in B.________ (Honduras). It is a member of the Honduran Football Federation which belongs to FIFA since 1946.
A.b Through the player’s agent C.________ the Parties came into contact in May 1999. This involved the transfer of the Honduran football player D.________ from the Respondent to the Appellant.
On June 1st, 1999 there were various meetings between C.________, the football player and his agent E.________, the sport manager of the Respondent F.________ and G.________ the President of the Appellant.
Pursuant to the negotiations thus conducted an agreement dated June 1st, 1999 was produced with the following wording:
Regarding the transfer of the player Mr. D.________ by mean of this document.
1) X.________ will pay to the club Y.________ the total sum of 2,200,000 USD (...).
(c) Club Y.________ will immediately send the transfer of the player as soon it will receive the total sum guarantee in the form of a stand-by-letter of credit in the name of Club Y.________ to be confirmed by Banco H.________ that will be issued the 30th July 1999 by Banco I.________ on behalf of X.________
(2) In case of a future transfer of the player from X.________ to a third club, and in case that the revenue will be superior of the sum paid to the Club Y.________ as a transfeer fee (...), X.________ will pay to the Club Y.________ the following royalties calculated on the difference between the sum of point A)a) and the sum received by the other club:
a) 20 % (twenty percent) if the transfer will be less of 7,000,000 USD (seven millions US Dollars);
b) 15 % (fifteen percent) if the transfer will be major of 7,000,000 USD (seven millions US Dollars).3"
The contract bears the signatures of G.________ for the Appellant and K.________ for the Respondent.
A.c On June 26, 2007 the Appellant and the Italian Football Club L.________ entered into a contract for the transfer of D.________ for an amount of € 14 million.
On the basis of the June 1st, 1999 agreement the Respondent eventually claimed a payment of at least USD 2’514’723 from the Appellant as a consequence of the transfer of D.________ to the Club L.________. The Appellant rejected the claim taking the view that the contract on which the June 1st, 1999 agreement was based was a forgery and that consequently the agreement had no validity.
B.a On November 1st, 2007 the Respondent filed a claim with FIFA seeking an order to the Appellant to pay an amount of at least USD 2’514’723.
On March 20, 2010 the single judge of the FIFA Players’ Status Committee upheld the claim and ordered the Appellant to pay USD 2’514’723 to the Respondent.
B.b On August 9, 2010 the Appellant appealed to the Court of Arbitration for Sport (CAS) in Lausanne. It submitted that the decision of the single judge of the FIFA Player’s Status Committee should be annulled and the Respondent’s claim rejected.
In an arbitral award of September 15, 2011 (CAS 2010/A/2193) the CAS rejected the appeal and confirmed the decision of the single judge of the FIFA Players’ Status Committee.
The CAS came to the conclusion that the agreement of June 1st, 1999 was genuine and therefore valid.
In a Civil law appeal the Appellant asks the Federal Tribunal to annul the arbitral award of September 15, 2011 (CAS 2010/A/2193) and to send the matter back to the CAS for a new decision.
The Respondent submits in its answer that the appeal should be rejected. The CAS did not take a position. The Parties filed a reply and a rejoinder.
The file of the arbitral proceedings was submitted to the Federal Tribunal.
According to Art. 54 (1) BGG4 the Federal Tribunal issues its decision in an official language5, as a rule in the language of the decision under appeal. When the latter is in another language the Federal Tribunal resorts to the official language chosen by the parties. The award under appeal is in English. As English is not an official language and the parties used German in front of the Federal Tribunal, the decision shall be issued in that language.
In the field of international arbitration a Civil law appeal is allowed under the requirements of Art. 190-192 PILA6 (SR 291) (Art. 77 (1) (a) BGG).
The seat of the Arbitral tribunal is in Lausanne in this case. Both parties had their seat outside Switzerland at the relevant time. As the parties did not rule out the provisions of chapter 12 PILA in writing they are applicable (Art. 176 (1) and (2) PILA).
As a principle, a Civil law appeal within the meaning of Art. 77 (1) BGG may seek only the annulment of the decision, i.e. it cannot lead to the reversal of the decision appealed (see Art. 77 (2) BGG ruling out the applicability of Art. 107 (2) BGG to the extent that the latter provision allows the Federal Tribunal to decide the matter itself).
The matter is therefore capable of appeal to the extent that the annulment of the award under appeal is requested. Yet to the extent that it is asked that the case should be sent back to the CAS for a new decision, the matter is not capable of appeal.
The only grounds for appeal allowed are those limitatively spelled out in Art. 190 (2) PILA (BGE 134 III 186 at 5 p. 187; 128 III 50 at 1a p. 53; 127 III 279 at 1a p. 282). According to Art. 77 (3) BGG the Federal Tribunal reviews only the grievances which are brought forward in the appeal and supported by reasons; this corresponds to the duty to explain the grounds for appeal contained in Art. 106 (2) BGG for the violation of constitutional rights and of cantonal and intercantonal law (BGE 134 III 186 at 5 p. 187 with references). Criticism of an appellate nature is not allowed (BGE 119 II 380 at 3b p. 382).
The Federal Tribunal bases its decision on the facts found by the arbitral tribunal (Art. 105 (1) BGG). This covers both the findings as to the essential facts that are the basis of the dispute and those concerning the arbitral proceedings, in particular the submissions of the parties (judgment 4A_210/2009 of April 7, 2010 at 2; 4A_439/2010 of October 20, 2011 at 2.1). The Federal Tribunal may neither correct nor supplement the factual findings of the arbitral tribunal, even when they are blatantly inaccurate or based on a violation of the law within the meaning of Art. 95 BGG (see Art. 77 (2) BGG which rules out the applicability of Art. 97 BGG and of Art. 105 (2) BGG). However the Federal Tribunal may review the factual findings of the award under appeal when some admissible grounds of appeal within the meaning of Art. 190 (2) PILA are brought against such factual findings or exceptionally when new evidence is taken into account (BGE 133 III 139 at 5 p. 141; 129 III 727 at 5.2.2 p. 733; with references). Whoever wishes to claim an exception to the rule that the Federal Tribunal is bound by the factual findings of the arbitral tribunal and seeks to correct or supplement the facts on this basis must show with reference to the record that the corresponding factual allegations were made in the arbitral proceedings in accordance with applicable procedural rules (see BGE 115 II 484 at 2a p. 486; 111 II 471 at 1c p. 473; with references).
The Appellant disregards these principles in part: it precedes its legal argument with a presentation of the facts on several pages in which it presents the background of the dispute and the proceedings from its own point of view. In doing so it deviates in several respects from the factual findings of the Arbitral tribunal or broadens them without claiming any substantial exceptions to the rule that the factual findings are binding. To this extent its arguments shall not be addressed. To the extent that the Appellant furthermore argues against the factual findings of the Arbitral tribunal in the caption “C. allegedly lacking apparent authority of C.________”, it disregards the requirements to substantiate an appeal as to the factual findings. It is not sufficient in this respect to argue merely the presence of the ground of appeal at Art. 190 (2) (d) PILA or the violation of the right to contradictory proceedings without developing the grievance in an understandable way even tentatively. The matter is not capable of appeal from that point of view.
The Appellant argues that the CAS violated its right to be heard (Art. 190 (2) (d) PILA) to the extent that its submission that the Agreement of June 1st, 1999 should be examined by an expert as to its authenticity was only granted in part. The CAS would have assigned the independent expert Dr. N.________ merely the task of examining the authenticity of the signatures instead of examining the whole document as had been requested. This deficiency would not have been cured by the second expert report of April 20, 2010 as the Appellant would not have had the possibility to “interrogate” the expert “extensively”. A further violation of the right to be heard is claimed by the Appellant because the CAS would have rejected its submission that the Agreement should be examined by its own party appointed expert as to its authenticity.
The party considering itself harmed by a refusal of the right to be heard or another procedural violation pertinent for the purposes of Art. 190 (2) PILA forfeits its grounds of appeal when it does not raise them in the arbitral proceedings timely and does not undertake all reasonable efforts to remedy the violation (judgment 4A_617/20107 of June 14, 2011 at 3.1, publ. in: ASA Bulletin 1/2012, p. 138 ff, 141 ff; BGE 119 II 386 at 1a p. 388; as to the grounds for a challenge: BGE 126 III 249 at 3c p. 253 ff; see also the revised Art. 1466 of the French Code of Civil procedure: "The party which does not invoke timely in front of the arbitral tribunal an irregularity of which it is aware and without any legitimate reason to do so is deemed to have renounced it8"; according to the report to the Prime Minister as to the Decree n° 2011-48 of January 13, 2011 Reforming Arbitration Law, in: Journal officiel de la République française, this has codified the anglo-saxon “principle of estoppel”). It is indeed contradictory to good faith to raise a procedural violation only in the framework of an appeal although it would have been possible to give the arbitral tribunal the possibility to remedy the violation in the arbitral proceedings (BGE 119 II 386 at 1a p. 388; judgment 4P.72/2001 of September 10, 2001 at 4c). A party acts in breach of the requirement of good faith and abusively in particular when it keeps some grounds of appeal in reserve only to raise them in case the proceedings do not go in its favor and anticipates that it may lose the case (see BGE 126 III 249 at 3c p. 254).
3.2.1 In its appeal of August 9, 2010 the Appellant submitted that the original of the June 1st, 1999 should be examined as to its authenticity by an expert to be appointed by the CAS. Should the expert reach the conclusion that the document was genuine, then the Appellant should be given the additional right to designate its own expert.
In a letter of October 26, 2010 the CAS advised the Parties that it would appoint an independent expert entrusted with examining the authenticity of the document. The Appellant’s submission to be given the right to appoint its own expert should the independent expert conclude in favor of authenticity was rejected by the CAS.
On December 22, 2010 the CAS appointed Dr. N.________ of O.________ of the University of Lausanne as independent expert asking him to determine whether the signature of G.________ on the June 1st, 1999 Agreement was genuine.
In his expert report of January 12, 2011 Dr. N.________ reached the conclusion that the signature by G.________ was genuine.
In a brief of January 24, 2011 the Appellant stated its position as to the expert report and criticized the fact that it would only take a position as to whether the signature was authentic although the Appellant had requested that the authenticity of the entire Agreement should be examined. On that basis the Appellant stated its opposition “to any sort of the Opinion’s consideration in the present arbitrational proceedings”9. The expert Dr. N.________ was heard during the hearing of February 1st, 2011. On the basis of the Appellant’s objections to the first expert report the Arbitral tribunal asked the expert to clarify further the authenticity of the agreement of June 1st, 1999.
In a second expert report of April 20, 2011 Dr. N.________ concluded that the letterhead of the document under examination was authentic and that there was no indications which would question the authenticity of the document at hand.
The Appellant stated its position in this respect in a submission of May 4, 2011. It merely argued that the Respondent had no factual or legal claim against the Appellant and that “such outcome being entirely independent of the authenticity/non-authenticity of the Agreement dated 1st June 1999”10. The alleged authenticity of the Agreement examined by the expert “would therefore not be important “11.
3.2.2 In its brief of May 4, 2011 the Appellant did not ask that Dr. N.________ should be heard as to the second expert report, neither did it maintain its request to be allowed to designate a party appointed expert. It did not raise a violation of the right to be heard either. To the contrary, it stated that it was irrelevant whether or not the Agreement of June 1st, 1999 was authentic. Therefore the CAS could and should the Appellant no longer had any formal objections as to how the authenticity of the document had been clarified.
Had the Appellant considered that its right to be heard was violated, it should have raised a corresponding argument before the award under appeal of September 15, 2011 was issued, thereby giving the Arbitral tribunal the possibility to cure the alleged violation. By leaving this aside and waiting to see if the judgment would be in its favor it forfeited the right to argue in front of the Federal Tribunal that the right to be heard was violated. The matter is not capable of appeal in this respect.
The Appellant furthermore argues that the CAS violated its right to be heard (Art. 190 (2) (d) PILA) and violated procedural public policy (Art. 190 (2) (e) PILA) by not taking into consideration the written witness statement of C.________.
Art. 190 (2) (d) PILA allows an appeal only on the basis of mandatory procedural rules according to Art. 182 (3) PILA. Pursuant to this provision the Arbitral tribunal must in particular abide by the right of the parties to be heard. With the exception of the right to receive reasons this corresponds to the constitutional right embodied in Art. 29 (2) BV12 (BGE 130 III 35 at 5 p. 37 ff; 128 III 234 at 4b p. 243; 127 III 576 at 2c p. 578 ff). Case law derives from this in particular the right of the parties to express their views as to all facts important for the decision, to present their legal arguments, to prove their allegations of facts important for the decision with suitable, timely and formally acceptable evidence, to participate in the hearings and to access the record (BGE 130 III 35 at 5 p. 38; 127 III 576 at 2c p. 578 ff; with references). The right to be heard is not without limits in arbitral proceedings too. Thus it is not forbidden that the arbitral tribunal assesses the facts only on the basis of the evidence it considers suitable and relevant (BGE 119 II 386 at 1b p. 389; 116 II 639 at 4c p. 644). The arbitral tribunal may renounce the taking of evidence when the corresponding evidentiary submission does not concern a legally relevant fact, when the evidence proposed is blatantly unsuitable or when the tribunal has already persuaded itself on the basis of the evidence already received and can assume by way of anticipated assessment of the evidence that further evidence would not change its conviction (see BGE 134 I 140 at 5.3; 130 II 425 at 2.1 p. 429; 124 I 208 at 4a). The anticipated assessment of evidence by an international arbitral tribunal may be reviewed in appeal proceedings only from the limited point of view of the violation of public policy (judgment 4A_600/201013 of March 17, 2011 at 4.1; 4P.23/2006 of March 27, 2006 at 3.1; 4P.114/2003 of July 14, 2003 at 2.2).
At 2.8 of its award the CAS dealt with the written testimony of C.________. It stated that according to this witness statement a meeting would have taken place between G.________ and K.________ in the office of the Appellant’s president in A.________ on June 1st, 1999. However the presence of K.________ in A.________ on June 1st, 1999 was questioned by other evidence, particularly by the statements of K.________ himself, as well as by F.________ and E.________. After careful consideration the CAS came to the conclusion that K.________ was not physically present in A.________ on June 1st, 1999. The CAS relied in this respect on the witness statement of E.________ that he confirmed verbally at the hearing of February 1st, 2010, that K.________ was not there when the contract was concluded. The CAS stated the following in this respect: “The Panel is also of the opinion that the witness statement of C.________ is not to be taken into account, if not confirmed by other evidence, because C.________ decided at the last moment not to appear at the hearing held in front of the Panel, and by this surprising even the Appellant and its Counsel. Moreover, the Panel found that there were contradictions between the written witness statement of C.________, and the testimony of the president of the Appellant, who testified orally at the hearing”14.
This shows that the CAS did not at all ignore the written witness statement of C.________ or left it unheeded but that it considered, analyzed and compared it with other evidence and examined its congruence (see the reference to “contradictions between the written witness statement of C.________ and the testimony of the president of the Appellant15”). That the CAS refuses to give importance to the written statement of C.________ to the extent that it is not confirmed by other evidence is an assessment of the evidence. There can be no argument that the witness statement of C.________ would not have been taken into consideration. There is no violation of the right to be heard.
To the extent that the Appellant also relies on public policy in connection with the written witness statement of C.________, the matter is not capable of appeal as the specific grounds of appeal of Art. 190 (2) (a) to (d) PILA prevail on the one at Art. 190 (2) (e) PILA (judgment 4A_600/201016 of March 17, 2011 at 4.3 in: ASA Bulletin 2012, p. 119 ff, 125; 4P.105/2006 of August 4, 2006 at 5.3 in: ASA Bulletin 2007, p. 105 ff, 114).
The appeal must be rejected to the extent that the matter is capable of appeal. In such an outcome of the proceedings the judicial costs shall be borne by the Appellant and it shall pay compensation to the other Party (Art. 66 (1) compared to Art. 68 (2) BGG).
Therefore the Federal Tribunal pronounces:
- The appeal is rejected to the extent that the matter is capable of appeal.
- The judicial costs set at CHF 20’000 shall be borne by the Appellant.
- The Appellant shall pay to the Respondent an amount of CHF 22’000 for the federal judicial proceedings.
- This judgment shall be notified in writing to the Parties and to the Court of Arbitration for Sport (CAS).
Lausanne May 31st, 2012.
In the name of the First Civil law Court of the Swiss Federal Tribunal.
The Presiding Judge: The Clerk:
Klett (Mrs.) Hurni
- 1. Translator’s note: Quote as Club X._____ v. Club Y._____, 4A_682/2011. The original of the decision is in German. The text is available on the website of the Federal Tribunal www.bger.ch
- 2. Translator’s note: ZGB is the German abbreviation for the Swiss Civil Code.
- 3. Translator’s note: In English in the original text.
- 4. Translator’s note: BGG is the German abbreviation for the Federal Statute of June 17, 2005 organizing the Federal Tribunal, RS 173 110.
- 5. Translator’s note: The official languages of Switzerland are German, French and Italian.
- 6. Translator’s note: PILA is the most commonly used English abbreviation for the Federal Statute on International Private Law of December 18, 1987, RS 291.
- 7. Translator’s note: Full English translation at http://www.praetor.ch/arbitrage/the-right-to-the-appointment-of-an-expert-by-the-arbitral-tribun/
- 8. Translator’s note: Translated from the original French text quoted in the decision.
- 9. Translator’s note: (sic). In English in the original text.
- 10. Translator’s note: In English in the original text.
- 11. Translator’s note: In English in the original text.
- 12. Translator’s note: BV is the German abbreviation for the Swiss Constitution.
- 13. Translator’s note: Full English translation at http://www.praetor.ch/arbitrage/cas-award-allocating-fees-and-costs-in-violation-of-the-right-to/
- 14. Translator’s note: In English in the original text.
- 15. Translator’s note: In English in the original text.
- 16. Translator’s note: Full English translation at http://www.praetor.ch/arbitrage/cas-award-allocating-fees-and-costs-in-violation-of-the-right-to/