No violation of due process if wrong assessment of evidence; no violation of public policy (pacta sunt servanda)

Case information
January 12, 2011
4A_394/2010
Interest to foreign readers: 
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Very interesting
Topics: 
Violation of due process (right to be heard)
Violation of public policy
Decisions of Lausanne Court of Arbitration for Sport
Original language: 
French
Chairman: 

Counsel

Appellant: 
Respondent: 
Introductory note: 

The case of the well-known football player Essam El Hadary has occupied the Federal Tribunal three times, and the enclosed decision of January 12, 2011, is the second one.

 

As you may recall, a first decision of January 20, 2010 (4A_548/2009), involved a jurisdictional award of the Court of Arbitration for Sport issued on October 7, 2009.

 

As it turned out, the same composition of the CAS (Massimo Coccia, Chairman, Olivier Carrard (a Partner at ZPG), and Ulrich Haas) issued an award on the merits on June 1, 2010. The award partially granted El Hadary’s appeal but both the player and the Swiss football club FC Sion Association appealed to the Federal Tribunal.

 

The enclosed opinion of the Federal Tribunal of January 12, 2011, is therefore the second decision. The third one may be found here (4A_392/2010).

 

The opinion dealt with the following:

 

  1. An argument of violation of the right to be heard was made, and the Federal Tribunal emphasized once again that the process by which an international arbitral tribunal assesses the evidence, even if it turns out to be wrong (though it was not in this case), is not within the grounds of appeal at Art. 190 (2) PILA.

 

  1. The Federal Tribunal also repeated its often-expressed view that while the rule of pacta sunt servanda does belong to the realm of material public policy as understood in Swiss parlance, applying the principle that contracts should be observed in a way that violates public policy would require an international arbitral tribunal to find that a contractual clause binds the parties and then refuse to enforce it, or, conversely, deny the existence of a contractual commitment but still enforce it. Needless to say, that is most unlikely ever to happen in practice (see section 5 of the award in this respect).
Translation: 

120039-152/PON/akr

4A_394/20101

 

Judgment of January 12, 2011

 

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: M. CARRUZZO.

 

Essam El Hadary

Appellant,

Represented by Mr Léonard A. Bender

 

v.

 

1. Fédération Internationale de Football Association (FIFA)

Represented by Mr. Christian Jenny

2. Al-Ahly Sporting Club

Respondents

 

Facts:

 

A.

A.a

Essam El Hadary is an Egyptian professional football player born on January 15, 1973. As a goal keeper, he conducted most of his professional carrier with the Egyptian team Al-Ahly Sporting Club and was part of the National Egyptian Team more than a hundred times.

 

Al-Ahly Sporting Club is a professional football club belonging to the Egyptian Football Federation (EFF), itself a member of the Fédération Internationale de Football Association (FIFA).

 

A.b

On January 1, 2007, Essam El Hadary and Al-Ahly Sporting Club signed an employment contract valid until the end of the 2009-2010 season.

 

On February 15, 2008, the player entered into an employment contract with FC Sion, a Swiss professional football club, valid until the end of the 2010-2011 season.

 

The EFF refused to issue the International Transfer Certificate (ITC) to the Swiss Football Association (SFA).

 

On April 18, 2008, the single judge of the FIFA Players’ Status Committee provisionally authorized the SFA to register Essam El Hadary as a player for FC Sion immediately. The decision reserved the outcome of the dispute between the Egyptian club and its player as to the circumstances in which their employment relationship had been terminated, a dispute to be decided by the Dispute Resolution Chamber (DRC) of FIFA.

 

A.c

On June 12, 2008, Al-Ahly Sporting Club took Essam El Hadary and FC Sion in front of the DRC with a view to their being severally ordered to pay EUR 2,000,000 for breach of contract and inciting to such a breach as well as other sport sanctions.

 

On April 16, 2009, the DRC ordered the Defendants severally to pay an amount of EUR 900,000 to the Claimant. Moreover, it suspended the player for four months from the beginning of the next season and enjoined FC Sion from recruiting any new players during the two registration periods after the award.

 

B.

On June 18, 2009, Essam El Hadary appealed the aforesaid decision to the Court of Arbitration for Sport (CAS) (CAS 2009/A/1881). He indicated that he was doing so only to avoid jeopardizing his rights while denying the jurisdiction of the CAS.

 

The same day, FC Sion Association also filed an appeal against the aforesaid decision with the CAS, though without questioning the jurisdiction of the Arbitral Tribunal (CAS 2009/A/1880).

 

In its brief on the appeal of July 10, 2009, Essam El Hadary mainly submitted that the arbitral proceedings should be stayed until a decision on the merits in the civil case he had initiated in front of a Zurich Court with a view to obtaining the annulment of the DRC decision pursuant to Art. 75 CC2. Alternately, he asked the CAS to issue an interlocutory decision by which it would find that it had no jurisdiction to entertain the appeal.

 

The CAS joined the two aforesaid arbitral proceedings as to the merits; however, it decided to deal with the issues of jurisdiction and lis pendens separately. In an award of October 7, 2009, it rejected the defenses and found that it had jurisdiction to address the merits of the appeal made by Essam El Hadary.

 

Against that award the Egyptian player filed a civil law appeal, which the Federal Tribunal rejected in its decision of January 20, 2010 (case 4A_548/2009).

 

C.

After addressing both cases on the merits, the CAS, composed of Massimo Coccia, Chairman, and Olivier Carrard and Ulrich Haas, arbitrators, issued a final award on June 1, 2010. Partially admitting the appeal by Essam El Hadary, it ordered the latter to pay USD 796,500 with interest to Al-Ahly Sporting Club and banned him from any official game for four months from the beginning of the 2010-2011 season.

 

After examining the evidence, the arbitrators held in short that the Appellant had not been able to establish that the employment contract binding him to the Egyptian club had been terminated by agreement between the parties. They then applied to the case at hand the criteria set forth at 17.1 of the Regulations on the Status and Transfer of Players adopted by FIFA (RSTP) to determine the amount owed to the Respondent by the Appellant, reducing that amount to USD 796,500 instead of EUR 900,000. Pursuant to Art. 17.3 RSTP, the Panel also issued a sporting sanction against the Appellant.

 

D.

On July 1, 2010, Essam El Hadary filed a civil law appeal with a view to obtaining the annulment of the June 1, 2010, award.

 

FIFA and the CAS submitted that the appeal should be rejected. Al-Ahly Sporting Club submitted no answer within the time limit it had been given for that purpose.

 

The request for a stay of enforcement submitted by the Appellant was granted ex parte and subsequently rejected by decision of the Presiding Judge on October 12, 2010, and so was the request seeking that this case be joined with case 4A_392/2010 relating to the appeal filed by the FC Sion Association against the same award.

 

Reasons:

 

1.

According to Art. 54 (1) LTF3, the Federal Tribunal issues its decision in an official language4, as a rule in the language of the decision under appeal. When the decision is in another language (here English), the Federal Tribunal resorts to the official language chosen by the parties. In front of the CAS they used English and French. In the brief submitted to the Federal Tribunal the Appellant used French. The answer by Respondent FIFA was in German. According to its practice, the Federal Tribunal will adopt the language of the appeal and consequently issue its judgment in French.

 

2.

In the field of international arbitration, a civil law appeal is possible against the decisions of arbitral tribunals under the conditions set forth at Art. 190 to 192 PILA5 (Art. 77 (1) LTF). Whether as to the object of the appeal, the standing to appeal, the time limit to appeal, the submissions made by the Appellant, or the grievances raised in the appeal brief, none of these admissibility requirements raises any problems in this case. There is accordingly no reason not to address the merits of the appeal.

 

 

 

3.

The Appellant had raised a first argument based on Art. 190 (2) (a) PILA in connection with the presence of arbitrator Ulrich Haas on the Panel that issued the award under appeal. He had also sought the introduction of evidence in order to substantiate his argument. However, in a letter of November 16, 2010, he withdrew this argument and evidentiary request. There is accordingly no reason to examine the argument or to decide on the admissibility of the evidence proposed in its support.

 

4.

4.1 According to the Appellant, the CAS would have “severely breached the mandatory principles of procedure mentioned at Art. 190 (2) (e) PILA”. According to him, the award under appeal would breach his right to be heard and the rule of equal treatment of the parties to the extent that the panel would have disregarded its minimal duty to examine and handle the pertinent issues. The Appellant specifically seeks to demonstrate that the arbitrators did not take into account the testimony by Abdel Zeaf that would establish that his departure from the Egyptian club was mutually agreed.

 

4.2 It is far from sure that the matter is capable of appeal in this respect. In fact, Art. 190 (2) (e) PILA, which the Appellant quotes, mentions no mandatory principle of procedure as it refers to the incompatibility of the award with public policy. It is actually letter (d) of the same provision that the Appellant should have invoked to seek a finding that the guarantees embodied at Art. 182 (3) PILA (equality between the parties and right to be heard in contradictory proceedings) had been breached. It might yet be too formalistic to reject the argument simply for that reason, as the Appellant specifically mentioned the procedural guarantees with which the Panel would not have complied. However, there is no need to examine the issue in greater depth, as the grievance raised is unfounded anyway.

 

The Appellant argues that the CAS did not take into consideration the crucial testimony of Abdel Zeaf. Formulated in this way the argument is rather audacious. In fact the Panel devoted three paragraphs of the award to analyzing that testimony (nr. 190 to 192), and two of these are quoted expressis verbis in the appeal brief (p. 9 ff). In reality the Appellant submits arguments of a purely appellatory nature to criticize the results of the analysis. In doing so he merely criticizes the way in which the arbitrators assessed the evidence. This disregards the fact that the assessment of the evidence, even if it were arbitrary, is not among the grounds for appeal contemplated by Art. 190 (2) PILA, irrespective of the perspective.

 

Consequently, there is no evidence at all in this case of the alleged violation of the Appellant’s right to be heard or of any unequal treatment that he would have suffered.

 

5.

The Appellant further argues that the Panel would have disregarded the principle of “contractual observance” and consequently issued an award inconsistent with public policy.

 

5.1 The substantive review of an international arbitral award by the Federal Tribunal is limited to the issue of the compatibility of the award with public policy (ATF 121 III 331 at 3a).

 

An award is inconsistent with public policy if it disregards the essential and broadly recognized values which, according to prevailing Swiss concepts, should constitute the basis of any legal order (ATF 132 III 389 at 2.2.3). It is contrary to substantive public policy when it violates some fundamental principles of material law to the extent that it is no longer consistent with the determining legal order and system of values; among such principles is the observance of contracts embodied in the Latin maxim pacta sunt servanda.

 

The rule of pacta sunt servanda, within the restrictive meaning it has according to case law relating to Art. 190 (2) (e) PILA, is violated only if the arbitral tribunal refuses to apply a contractual clause whilst admitting that it binds the parties, or, conversely, if it orders them to comply with a clause of which it considers does not bind them. In other words, the arbitral tribunal must have applied or refused to apply a contractual provision in a manner contradictory with the result of its interpretation as to the existence or the contents of the legal instrument in dispute. Still, both the interpretation process and the legal consequences logically drawn therefrom are not governed by the principle of observance of contracts, so they cannot be challenged on the basis of an alleged violation of public policy. The Federal Tribunal pointed out repeatedly that almost the entire realm of contractual disputes is outside the scope of the rule of pacta sunt servanda (judgment 4A_43/2010 of July 29, 2010, at 5.2 and the cases quoted).

 

5.2 Assessing the evidence in the record of this case, the Panel held that the Appellant had unilaterally breached the employment contract he had with the Respondent club. On that basis it imposed the monetary and sporting sanctions foreseen by the ad hoc rules in case of breach of an employment contract without cause. Such reasoning contains no internal contradiction at all. This suffices to rule out any violation of the rule of pacta sunt servanda within the restrictive meaning it has in this context. Disputing this, the Appellant really criticizes merely the basis of that reasoning, namely the findings as to the conditions under which he left the Egyptian club. He is not allowed to do so in an appeal against an international arbitral award.

 

Finally, the Appellant’s mere allegations that the award under appeal would be shocking in its result, fly in the face of equity, and be tantamount “to a kind of sporting death” are entirely improper to establish the inconsistency of the aforesaid award with substantive public policy within the narrow meaning given by the aforesaid case law.

 

6.

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 (Art. 66 (1) LTF). He shall additionally compensate FIFA for the costs of the federal judicial proceedings (Art. 68 (1) and (2) LTF). The Respondent club filed no answer and is not entitled to compensation.

 

Therefore the Federal Tribunal pronounces:

 

1.     The appeal is rejected to the extent that the matter is capable of appeal.

 

2.     The judicial costs, set at CHF 10,000, shall be borne by the Appellant.

 

3.     The Appellant shall pay to Fédération Internationale de Football Association (FIFA) an amount of CHF 12,000 for the federal judicial proceedings.

 

4.     This judgment shall be notified to the Parties and to the Court of Arbitration for Sport (CAS).

 

Lausanne, January 12, 2011

 

In the name of the First Civil Law Court of the Swiss Federal Tribunal

 

The Presiding Judge:                                                   The Clerk:

 

 

KLETT (Mrs)                                                             CARRUZZO

 
  • 1. Translator’s note :      Quote as Essam El Hadary v. Fédération Internationale de Football Association (FIFA) and Al-Ahly Sporting Club 4 A_394/2010. The original of the decision is in French. The text is available on the website of the Federal Tribunal www.bger.ch.
  • 2. Translator’s note :      CC is the French abbreviation for the Swiss Civil Code.
  • 3. Translator’s note :      LTF is the French abbreviation for the Federal Statute of June 17, 2005 organizing the Federal Tribunal, RS 173.110.
  • 4. Translator’s note :      The official languages of Switzerland are German, French and Italian.
  • 5. 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.