Interpretation of the facts by the arbitral tribunal regarding its jurisdiction - review by the Federal Tribunal
On November 6, 2001, INFRONT SPORT AND MEDIA AG (“INFRONT”), a Swiss company specializing in the marketing of advertising rights in the field of sports and the Belarus Football Federation (“BFF”) entered into a contract giving INFRONT certain broadcasting and advertising rights for the home plays of the national Belarus football team between 2002 and 2007.
A dispute arose and since the contracts contained an ICC arbitration clause with venue in Zurich, INFRONT initiated arbitral proceedings with a view to obtaining a finding that the contract had been extended until December 2011 and that INFRONT was accordingly entitled to the corresponding rights. Also, INFRONT sought an order restraining the Belarus federation from any actions which could jeopardize INFRONT’s rights under the contract.
Swiss arbitrator Bernhard BERGER, acting as sole arbitrator, issued an award on the merits on January 12, 2009. The arbitrator rejected INFRONT’s submission for a finding that the contract had been extended and denied jurisdiction as to the Claimant’s second submission. The Arbitral Tribunal held that it had jurisdiction with regard to damages and partially granted the claim in this respect, with costs.
Both parties appealed to the Federal Tribunal.
The opinion contains a number of interesting features, namely:
(i) Sections 3.1 and 3.2 of the opinion deal with the issue of jurisdiction and they show once again that the Federal Tribunal can be quite thorough in reviewing the basis on which jurisdiction should be found, as opposed to any material criticism of the award on the merits, which tends to be rejected out of hand.
(ii) The same applies with regard to the Respondent’s appeal. See section 5 of the opinion. The Federal Tribunal found a contradiction in the award with regard to jurisdiction that it would certainly have rejected had a similar “contradiction” been argued with regard to the merits.
Judgement of June 9, 2009
First Civil Law Court
Federal Judge KLETT (Mrs), Presiding,
Federal Judge CORBOZ,
Federal Judge ROTTENBERG LIATOWITSCH (Mrs),
Federal Judge KOLLY,
Federal Judge KISS (Mrs)
Clerk of the Court: LEEMANN
Claimant and Appellant,
Represented by Dr Roberto DALLAFIOR
Represented by Dr Marc VEIT and Mr Fabian MEIER
Represented by Dr Marc VEIT and Mr Fabian MEIER
Claimant and Appellant,
Represented by Dr Roberto DALLAFIOR
A.a X._______ AG (the Claimant) is a common stock company incorporated in Zug. Its primary purpose is the marketing of advertising rights in the field of sport. The Y._______ Federation, based in D._______ (the Respondent) is the national football association of E._______. It organizes in particular the home plays of the national team of E._______.
A.b On November 6, 2001 the Claimant, at the time its predecessor Z._______AG, entered into a contract with the Respondent, pursuant to which the Claimant obtained certain broadcasting and advertising rights for the home plays of the national team of E._______ between January 1st, 2002 and December 31st, 2007. Article 11 of the contract contained the following provisions as to the extension of the business relationship between the Parties:
“11. Prolongation of the Contract. Federation Y._______ shall present to Z._______AG on the basis of the Contract a proposal of the terms and conditions of a new contract (“Proposal”) for the Matches of the National Team of E._______ for the qualification of the World Cup 2010 (qualification period 01.01.2008 – 31.12.2009) and European Championship 2012 (qualification period 01.01.2010 – 31.12.2011), latest on June 2007. If Federation Y._______ and Z._______AG cannot agree on the terms and conditions of this new contract within two (2) months after Z._______AG has received the Proposal in writing, then Federation Y._______ is free to enter into a new contract with any third party but only on the same or better terms and conditions as offered to Z._______AG in the Proposal, and only after giving Z._______AG the opportunity within seven (7) working days to accept such new terms. If Federation Y._______ fails to submit such a new Proposal for a contract prior to June 2007 this Contract shall remain valid under the existing terms and conditions if Z._______AG confirms this by written notice by 31 August 2007, at the latest”.2 The contract of November 6, 2001 also contains the following arbitration clause: “...all disputes arising out of or in connection with the present Agreement shall be exclusively and finally settled under the Rules of Arbitration of the International Chamber of Commerce (Paris). Place of arbitration shall be Zurich”.3
A.c From January 2006 the Parties conducted various discussions as to a possible extension of their business relationship for the period from January 1st, 2008 until December 31st, 2011, which covered in particular the plays for the qualification for the World Cup 2010 and the 2012 European Cup. However the Parties could not reach an agreement. Further to additional discussions in the spring of 2007 the Claimant presented the Respondent with the draft of a new contract on June 13, 2007. In a letter of June 28, 2007 the Respondent submitted another draft contract to the Claimant, which relied on an offer from A._______AG, another company marketing sport rights, in Wil/SG4 of June 26, 2007. The draft contract contained the offer of A._______AG to organise a friendly game between the national teams of E._______ and F._______. In a letter of July 10, 2007, the Claimant informed the Respondent that it was interested to continue negotiations as to the conditions of the contract. Since at that point in time it was not clear to the Respondent whether the Respondent’s offer triggered merely the time limit of two months for negotiations or already the seven days term to accept the third party offer according to article 11 (2) of the November 6, 2001 contract and since the Respondent said nothing in this respect, the Claimant stated that be this as it may it accepted the Respondent’s offer of June 28, 2007, however without the obligation to organise a friendly game against F._______. On August 28/29, 2007, the Parties met in D._______ and they conducted a discussion as to the conditions of a new contract. The Claimant’s representative left the meeting with the impression that the Parties had reached an agreement as to the conclusion of a new contract on the basis of the offer from A._______AG of June 26, 2007. Accordingly, the Claimant confirmed the agreement in a letter of August 30, 2007 and announced that it would submit a written draft contract to the Respondent as soon as possible. A few hours later the Respondent informed the Claimant by telecopy of its intent to enter into a contract with A._______AG on the basis of a revised contractual offer of that company of August 30, 2007. According to the new offer of A._______AG, the friendly game against F._______ should take place in D._______ in 2008. The Respondent also informed the Claimant of the possibility to accept the offer of A._______AG of August 30, 2007 within seven days on the basis of article 11 (2) of the November 6, 2001 contract. The aforesaid offer contained a jurisdiction clause in Zurich. In a letter of September 4, 2007, the Claimant again took the view that the Parties had already concluded a new contract on August 29, 2007 and added that for the sake of good order it would accept the second offer of A._______AG according to article 11 (2) of the November 6, 2001 contract. In a letter of September 5, 2007, the Respondent denied that a contract had been concluded in D._______ on August 29, 2007 as well as the validity of the acceptance of the new offer by the Claimant, because it doubted in particular that (the Claimant) would have the ability to organise the friendly game against F._______ in D._______ in 2008. The Respondent accordingly considered the Claimant’s acceptance as invalid. On September 14, 2007, the Respondent entered into a contract with A._______AG on the basis of the offer of August 30, 2007.
B.a On October 19, 2007 the Claimant filed a request for arbitration against the Respondent. It submitted in particular the following: “1. Declare that the Contract between Respondent and Claimant (and originally signed by its predecessor Z._______AG) dated 6 November 2001 regarding the broadcasting, advertising and other rights in the home matches (qualification home games including play-offs and friendly matches) of Respondent’s national Teams (Senior A-, U-21, Olympic- and Women-team) has been prolonged between Respondent and Claimant for the period of 1 January 2008 until December 2011; and declare in particular, that Claimant has validly acquired from Respondent a) exclusive worldwide television and related media rights in any language and for all forms of audiovisual exhibition; and b) advertising rights for all home games within the stadium for minimum uninterrupted 220 meters at the track side of the playing ground (110 m touchline, 55m each goal line) for all home matches (qualification home games including play-offs and friendly matches) of the national team of E._______ (Senior A-, U-21, Olympic- and Women-team) for the period of 1 January 2008 until 31 December 2011 and for the territory of the world (except the territory of E._______ with regard to live rights); and 2. Order Respondent to refrain from any actions which could jeopardize Claimant’s rights under the Contract, in particular the rights described in plea for relief n° 1, and, in particular, from any actions which would directly or indirectly help making available such rights to a third party or which would assist such third party in marketing such rights; [...].”5. Additionally the Claimant sought damages, assessing its claim for damages during the proceedings at at least USD 3’447’557.-. The Respondent filed a counterclaim of USD 500’000.- with interest.
B.b In an award of January 12, 2009, the Arbitral Tribunal rejected the Claimant’s submission for a finding as to the alleged extension of the November 6, 2001 contract pursuant to submission 1 (1) (award paragraph 1). Furthermore it denied jurisdiction as to submissions 1 (2) (a) and (b) as well as submission 2 (award paragraphs 2 and 3). The Arbitral Tribunal partially upheld the Claimant’s claim for damages (award paragraph 4) whilst denying the Respondent’s counterclaim due to set off with the Claimant’s claim for damages. Finally the Arbitrator decided the costs of the arbitral proceedings (award paragraphs 5 – 8) and rejected all other claims or procedural submissions of the Parties (award paragraph 9). The Arbitral Tribunal held that a new contract had been entered into by the Parties with the Claimant’s acceptance of the offer on September 4, 2007. The acceptance did not lead to an extension of the existing contract of November 6, 2001, which expired on December 31st, 2007. The new contract of September 4, 2007 contained no arbitration clause but a jurisdiction clause. Since submissions 1 (2) (a) and (b) as well as submission 2 relied on the new contract of September 4, 2007, jurisdiction was not with the Arbitral Tribunal but with the ordinary courts of Zurich. With regard to the Claimant’s claim for damages, the Arbitral Tribunal held that it had jurisdiction and found that the Respondent owed the amount of USD 2’089’311.- to the Claimant, without prejudice to the counterclaim and the set off. Furthermore it held that the Respondent’s counterclaim for USD 500’000.- plus interest at 5% since December 19, 2007 (with the exception of USD 20’486.-) was fundamentally justified, yet in view of the set off as of October 16, 2008 it granted the Claimant USD 1’568’825.- and rejected the counterclaim.
Both Parties filed a Civil law appeal against the award of January 12, 2009. The Claimant submits that the Federal Tribunal should annul paragraphs 2 and 3 of the award and send the matter back to the Arbitrator for a new decision (4A_94/2009). For its part the Respondent submits that the January 12, 2009 award should be annulled (4A_96/2009). Both Parties filed answers submitting that the appeal of the other Party should be rejected. The Arbitral Tribunal did not take a position in the appeal proceedings.
When the same Parties are involved in the proceedings, as is the case here and the appeal is based on the same facts, the Federal Tribunal deals with the various issues in the same decision as a rule. It is accordingly justified under the circumstances to join both appeal proceedings 4A_94/2009 and 4A_96/2009.
2.1 The seat of the Arbitral Tribunal is in Zurich. At least one Party, in this case the Respondent, did not have its seat in Switzerland when the arbitration clause was entered into. As the Parties did not exclude the provisions of chapter 12 PILA in writing, they are applicable (art. 176 (1) and (2) PILA).
2.2 Only the grievances limitatively spelled out in art. 190 (2) PILA are admissible (BGE 134 III 186 at 5; 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 put forward and reasoned in the appeal; this corresponds to the requirements of art. 106 (2) BGG with regard to the violation of fundamental rights and of cantonal or intercantonal law (BGE 134 III 186 at 5 with references). Criticism of an appellate nature is not allowed (BGE 119 II 380 at 3b p. 382).
2.3 The Federal Tribunal bases its judgement on the facts found by the arbitral tribunal (art. 105 (1) BGG). It may not rectify or supplement the factual findings of the arbitral tribunal, even if they are obviously false or rely on a violation of the law within the meaning of art. 95 BGG (see art. 77 (2) BGG, which rules out the application of art. 105 (2) and of art. 97 BGG). However the Federal Tribunal may review the factual findings of the award under appeal when grievances within the meaning of art. 190 (2) PILA are brought forward 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 claims an exception to the rule that the Federal Tribunal is bound by the factual findings of the lower court and wishes to rectify or supplement the facts on that basis has to prove by reference to the proceedings that the corresponding factual allegations were already made in the proceedings in the lower court in conformity with procedural requirements (see BGE 115 II 484 at 2a p. 486; 111 II 471 at 1c p. 473; with references).
2.4 The parties agreed in the arbitral proceedings that the matter should be decided according to Swiss law (see art. 187 (1) PILA).
Claimant’s appeal (4A_94/2009).
Relying on art. 190 (2) (b) PILA, the Claimant argues that the Arbitrator was wrong to deny jurisdiction with regard to submissions 1 (2) and 2.
3.1 (The Claimant) argues that article 11 of the November 6, 2001 contract was interpreted inappropriately. Through the use of the matching right contained in the second paragraph of that provision no new contract was concluded but rather the previous contract continued. The reason for that would be the obligation contained in article 11 of the contract, which contained from the beginning a duty of the Respondent to extend the contract. That obligation to extend would have been merely weakened by the Claimant’s duty to adjust to better conditions (offered) in the market. That adaptation to changed or better market conditions would be determined either through negotiations or by the submission of a third party offer. In the latter case the Claimant had the right to continue the contract at these better conditions for the Respondent. Furthermore article 11 (1) of the November 6, 2001 contract would provide that the first offer should be submitted on the basis of the existing contract. Article 11 (2) also provided that the last offer should contain the same or better conditions as the first one. Thus article 11 would implicitly consider that only the commercial conditions would have to be discussed whilst the “framework” of the contract would remain, including the arbitration clause. Finally, from a procedural point of view, the jurisdiction of the Arbitral Tribunal, once established, could not disappear due to a change of the circumstances. At the time the request for arbitration was filed on October 19, 2007, the arbitration clause contained in the November 6, 2001 contract was the only relevant one, since the new provisions based on the offer of A._______AG covered only the time after the 1st of January 2008. The original jurisdiction clause was formulated very broadly and should include all disputes arising from the contract or in connection with the contract. This would include all issues relating to the continued performance of the contract of November 6, 2001. A division of jurisdiction on the basis of the issue involved would be excluded by the wording of the arbitration clause.
3.2 According to art. 190 (2) (b) PILA, the Federal Tribunal reviews the jurisdictional issues freely from a legal point of view, including the preliminary material issues from which the jurisdiction depends. As opposed to the foregoing it reviews the factual findings of the award under appeal, even with regard to jurisdictional issues, only to the extent that some admissible grievances within the meaning of art. 190 (2) PILA are made against such factual findings or exceptionally when new evidence is taken into consideration (BGE 133 III 139 at 5 p. 141; 129 III 727 at 5.2.2 p. 733; 128 III 50 at 2a p. 54).
3.2.1 To the extent that it is argued in the appeal that the Respondent would never have manifested the intent to conclude a new contract with the Claimant, that grievance is not admissible. Through this factual allegation the Claimant differs from the factual findings of the lower court without raising a grievance sufficiently reasoned to meet the legal requirements. Thus the Arbitral Tribunal held that the Respondent, in its letter of June 28, 2007, submitted to the Claimant a proposal to conclude a new contract for the timeframe from January 1st, 2008 until December 31st 2011. The argument that there would never have been a reciprocal statement of intent to agree is to be disregarded as well. According to the award under appeal the Parties agreed when they concluded the November 6, 2001 contract that the Claimant was to be granted a “Matching right”8 to the extent that it should be entitled to cause the conclusion of a contract between the Parties by stating its acceptance within seven days. (The Arbitral Tribunal) further held that the Respondent had submitted the offer of A_______AG to the Claimant and that the Claimant had accepted that offer. The claim that there would never have been a reciprocal exchange of statements of intent to agree cannot be based on the binding factual finding of the award under appeal.
3.2.2 The Claimant argues that the interpretation by the Arbitral Tribunal of article 11 of the November 6, 2001 contract, according to which the parties did not continue the performance of the existing contract but rather concluded another contract, would be wrong, yet it does not challenge paragraph 1 of the award under appeal, with which the Arbitral Tribunal rejected the submission for a finding that the November 6, 2001 contract had been extended, neither does it dispute the thorough reasoning of the award under appeal. (The Claimant) merely submits to the Federal Tribunal the interpretation of the contractual clause which would be pertinent in its view. Whether this meets the legal requirements of a sufficiently reasoned grievance at all or not (art. 77 (3) compared with art. 42 (2) BGG), the Claimant cannot be followed in this respect. The Arbitral Tribunal explained convincingly that on the basis of an objective interpretation of the statements of the Parties it was to be held that the Claimant’s acceptance of September 4, 2007 did not represent an extension of the existing contracts under new conditions but rather a new agreement. Thus article 11 (1) provided that the Claimant had to make a proposal for the conditions of a “new contract”9 for the following four years at the latest on June 30, 2007. According to the second paragraph of that contractual clause, the Parties also had two months to negotiate the conditions of “this new contract”10. Both provisions assumed that should the negotiations be successful, the Parties would enter into a new contract as opposed to extending the existing contract under different conditions. The same wording would be decisive should an agreement come about through the exercise of the “matching right”11 of the Claimant according to article 11 (2). That view is furthermore confirmed by a comparison between paragraphs 1 and 2 with paragraph 3 of article 11: according to the latter provision the existing contract would be “prolonged”12 in the absence of an offer whilst in the other cases (paragraphs 1 and 2) a new contract would have to be concluded. Finally, such an interpretation also corresponds to the purpose of the aforesaid contractual clause: in case of an offer to the Claimant it would be a fully newly formulated draft, all the more as in case of failure of the negotiations – as happened in this case – a binding offer from a third party would have to be submitted, which the Claimant could either accept or refuse. In this case it is neither proved nor apparent how with such considerations the lower court would have violated the principles of objective interpretation of expressions of intent developed by case law (see BGE 133 III 61 at 2.2.1 p. 67 with references). Contrary to the Claimant’s view the mechanisms for the continuation of the business relationship at article 11 (2) of the November 6, 2001 contract does not limit itself in particular to merely negotiating new commercial conditions whilst the “framework” of the contract (including the arbitration clause) would remain standing. The matching right after failure of the negotiations rather presupposes that a complete offer by a third party for the conclusion of a new contract is at hand, which the dispute resolution mechanism belongs. Based on the testimony from Mr. MARTE, the lower court pointed out that even the Claimant’s representative assumed that through the September 4, 2007 acceptance a new contract would come into being. Thus there would be a factual consensus between the Parties as to how the contract was concluded and the conclusion of a new contract would therefore have to be assumed irrespective of the interpretation according to the principle of trust (BGE 132 III 626 at 3.1 p. 632; 128 III 70 at 1a p. 73). Such a subjective interpretation of the contract incidentally relies on an assessment of the evidence, which is outside the federal judicial review as a matter of principle (see BGE 132 III 626 at 3.1 p. 632 with references). The Claimant does not allege that the case at hand would justify an exception to the rule that the Federal Tribunal is bound by the factual findings of the lower court. Its grievance is therefore groundless.
3.2.3 Neither does the Claimant’s subsidiary argument lead to a conclusion in its favour. Contrary to the view expressed in the appeal, the lower court did not assume that the existing arbitration clause in the November 6, 2001 contract would have been substituted by a new jurisdiction clause retroactively. The lower court instead clarified that any disputes arising from the new contract would no longer fall under the arbitration clause, whilst the arbitration clause would remain in force for claims based on the November 6, 2001 contract. Contrary to the Claimant’s opinion no duty to “effectively fulfil” the new contract concluded on September 2007 according to article 11 (2) or “to undertake no activities which would prevent the fulfilment” can be derived from the November 6, 2001 contract. It is rather the agreed upon jurisdiction clause which is decisive in case of violation of obligations under the new contract. To the extent that the Claimant seeks a finding that claims existed for the period between January 1st, 2008 and December 31, 2011, which could be based on the new contract between the Parties (see submission 1 (2)) the lower court was right to deny jurisdiction. Also with regard to the request that the Respondent be enjoined from certain actions, which could jeopardize such claims (submission 2) the Arbitral Tribunal accurately denied jurisdiction. The Claimant’s procedural comments do not change this as the case at hand does not at all raise an issue as to whether an existing jurisdiction could cease to exist due to changed circumstances, but rather the limits of jurisdiction on claims which rely on various contracts with different jurisdiction or arbitration clauses.
Respondent’s appeal (4A_96/2009)
The Respondent generally submits that the arbitral award of January 12, 2009 should be annulled. However its grievances are limited to the damages awarded to the Claimant (award paragraph 4). In its developments as to standing to appeal the Respondent only mentions its duty to pay damages in the amount of USD 1’568’825.- as a consequence of the award. Since the lower court either rejected (award paragraph 1) or denied jurisdiction (award paragraphs 2 and 3) with regard to the Claimant’s submissions for findings or for enjoining the Respondent (submissions 1 and 2), the Respondent’s standing to appeal would have to be denied in this respect as well. The Arbitral Tribunal found that it had jurisdiction to adjudicate the Respondent’s counterclaim which is connected to the qualifying game of November 21, 2007 for the 2008 European cup and it rejected the counterclaim due to set off (award paragraph 5). Whether or not an arbitral tribunal can entertain a defence of set off when the claim to be set off is not covered by the arbitration clause is disputed (see in this respect Anton HEINI, in Zürcher Kommentar zum IPRG, 2. Aufl. 2004, N. 6b ff at art. 186 IPRG; Franck VISCHER and others, Internationales Vertragsrecht, 2.Aufl. 2004, Rz. 1134 ff; Werner WENGER/Markus SCHOTT, in Basler Kommentar Zum IPRG, 2. Aufl. 2007, N. 41 ff at Art 186 IPRG; Felix DASSER in Basler Kommentar zum IPRG, 2. Aufl. 2007, N. 19 ff at Art. 148 IPRG; Christoph ZIMMERLI, Die Verrechnung im Zivilprozess und in der Schiedsgerichtsbarkeit, 2003, p. 187 ff). Yet the Respondent does not express a view in this respect. Thus the Respondent does not bring a sufficient grievance with regard to jurisdiction according to art. 190 (2) (b) PILA to the extent that the Claimant set off the counterclaim against its claim for damages (art. 77 (3) compared to art 42 (2) BGG). Hence it will be assumed hereunder that the appeal is limited to the annulment of paragraphs 4 and 6 – 8 of the award.
Based on art. 190 (2) (b) PILA, the Respondent argues that the lower court wrongly assumed jurisdiction as to the claim for damages.
5.1 The lower court held that it had jurisdiction as to claim for damages to the extent that it was based on the November 6, 2001 contract, which contained an arbitration clause. This would simply be a consequence of the fact that the Claimant’s acceptance of September 4, 2007 did not produce an extension of the November 6, 2001 contract but resulted in a new contract. The lower court relied on the fact that the claim for damages was based on an alleged violation of article 11 (2) of the November 6, 2001 contract by the Respondent. The Arbitral Tribunal considered that in a statement of September 4, 2007 the Claimant had made use of its “matching right”. To the extent that the Respondent refused to recognize the validity of the Claimant’s acceptance it disregarded the result of the contractual mechanism of article 11 (2). Thus it breached a contractual provision, namely the duty of being bound by the third party offer13, which the Respondent provided the Claimant with on August 30, 2007 and which the Claimant accepted without conditions on September 4, 2007. Another violation of article 11 would be that on September 14, 2007 the Respondent entered into an agreement with a third party as to the same object, although it was bound by the Claimant’s effective declaration of acceptance. Based on these considerations the lower court awarded damages to the Claimant for the loss of profit connected to the qualifying game for the 2010 World Cup between E._______ and G._______ which was played in D._______ in October 15, 2008.
5.2 As the Respondent accurately objects to these arguments, its behaviour as described does not constitute a violation of article 11 (2) of the November 6, 2001 contract once properly assessed, but rather, as the case may be, a violation of the new contract, the object of which was the broadcasting and advertisement rights for the time period between January 1st, 2008 and December 31st, 2011. To the extent that the award under review found that a new contract came about between the Parties as a consequence of the legally binding exercise of the matching right, i.e. through the Claimant’s unilateral statement of intent, no further intervention by the Respondent was either necessary or contractually due. A contract was concluded on the basis of the Claimant’s matching right irrespective of the Respondent’s agreement. Pursuant to article 11 (2) of the November 6, 2001 contract the latter was simply obliged to submit the third party offer to the Claimant in order to enable it to exercise the matching right, thus making the conclusion of the contract possible within seven days. As established by the factual findings of the award under review the Respondent abided by that obligation to the extent that it submitted the third party offer of A._______AG to the Claimant. No violation of the contractual mechanism of article 11 (2) appears there, which could lead to an obligation to pay damages. To the extent that the Respondent denied the validity of the Claimant’s acceptance and thus the creation of a new contract, it violated no obligation to be bound to the third party offer as contained in article 11 (2), contrary to the opinion of the lower court and the Claimant. As a consequence of the matching right following the statement of acceptance of September 4, 2007 it would rather be a new contract that came into existence irrespective of the Respondent’s legal view and new obligations with regard to the broadcasting and advertising rights would exist for the period between January 1st, 2008 and December 31st, 2011. To the extent that the Respondent felt that it was not bound to the obligations contained in the third party offer and would not abide by them, it might possibly violate the new contract of September 4, 2007 with the Claimant, but not the provision of article 11 (2) of the November 6, 2001 contract, which simply foresees a formal mechanism for the possible continuation of the business relationship, whilst remaining silent as to the precise contents and the conditions of the future relationship. The Respondent violated article 11 even less when on September 14, 2007 it concluded a contract with a third party for the time period after December 31st, 2007, also considering that the third party offer was submitted to the Claimant in conformity with the contract on August 30, 2007 already and accepted by the latter on September 4, 2007. In this respect as well, the Respondent conceivably violated the September 4, 2007 contract.
5.3 The damages awarded by the lower court for loss of profit in connection with the qualifying game for the 2010 World Cup between E._______ and G._______ on October 15, 2008 finds a possible basis on the September 4, 2007 contract between the Parties, as was explained, which refers to the broadcasting and advertising rights to the home plays of the national team of E._______ between January 1st, 2008 and December 31st, 2011, but not in the November 6, 2001 contract, which gave the Claimant the rights between January 1st, 2002 and December 31st, 2007 and ran out on December 31st, 2007. The award under review is also contradictory to the extent that it denied jurisdiction as to claims relating to the home games after January 1st, 2008, very accurately (see in this respect 3 above) on the basis of the jurisdiction clause in favour of the Zurich courts on the one hand, whilst finding on the other hand that it had jurisdiction to adjudicate a damage claim relating to the home game of October 15, 2008. The lower court therefore wrongly accepted jurisdiction to decide the claim for damages. The Claimant’s argument that the Respondent never claimed in the arbitral proceedings that the Arbitrator had no jurisdiction with regard to the damages claim, to the extent that it was based on the November 6, 2001 contract and therefore participated in the proceedings without objection, does not change the situation in this respect. According to the award under appeal the Respondent raised the lack of jurisdiction of the lower court in the proceedings, to the extent that the claim for damages was based on the new contract. Contrary to the Claimant’s view, the issue as to whether the claim for damages can be based on the November 6, 2001 contract or not, as it contains an arbitration clause as opposed to the new contract of September 4, 2007 can be reviewed by the Federal Tribunal as a preliminary issue material to the grievance as to jurisdiction (art. 190 (2) (b) PILA).
5.4 In view of the foregoing it is not necessary to entertain the Respondent’s other grievances that the arbitrator would have exceeded jurisdiction to adjudicate the claim for damages also by going above the amount of USD 1’000’000.- according to the arbitration clause (article 13.8 of the November 6, 2001 contract) or that the lower court would have violated the right to be heard.
The Claimant’s appeal is unfounded and must be rejected to the extent that the matter is capable of appeal. To the contrary, the Respondent’s appeal is to be accepted and paragraphs 4 and 6-8 of the award under appeal must be annulled and the matter sent back for a new decision as to the costs. In view of the outcome of the proceedings the Claimant will have to pay the costs and compensate the other Party (art. 66 (1) and art. 68 (2) BGG).
The Federal Tribunal pronounces:
1. Proceedings 4A_94/2009 and 4A_96/2009 are joined.
2. The Claimant’s appeal (4A_94/2009) is rejected to the extent that the matter is capable of appeal..
3. The Respondent’s appeal (4A_96/2009) is accepted and paragraphs 4 as well as 6-8 of the January 12, 2009 award are annulled and the matter is sent back to the lower court for a new decision as to the costs and compensation for the other party.
4. The judicial costs of CHF 26’000.- shall be borne by the Claimant.
5. The Claimant shall pay to the Respondent an amount of CHF 30’000.- for the federal judicial proceedings.
6. This judgement shall be notified in writing to the Parties and to the ICC Arbitral Tribunal in Zurich.
Lausanne, June 9, 2009
In the name of the First Civil Law Court of the Swiss Federal Tribunal
The presiding Judge (Mrs): The Clerk:
- 1. Translator’s note: Quote as X.________ v. Y.________, 4A_94/2009 and 4A_96/2009. 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: in English in the original text.
- 3. Translator’s note: in English in the original text.
- 4. Translator’s note: this means the canton of Saint-Gall.
- 5. Translator’s note: In English in the original text.
- 6. Translator’s note: PILA is the most frequently used English abbreviation for the Federal Statute of December 18, 1987, on Private International Law, RS 291.
- 7. Translator’s note: BGG is the German abbreviation for the Federal Statute of June 17, 2005 organizing the Federal Tribunal, RS 173.110.
- 8. Translator’s note: In English in the original text.
- 9. Translator’s note: 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: in English in the original text.
- 13. Translator’s note: in English in the original text.