Counsel failure to inform his client is not excusable
The case involved a dispute between a football club and a player whose employment contract ran between June 2010 and May 2012. However, based on a heart condition known to the club at the outset, the employment relationship was terminated in the spring of 2011.
The player sued in the FIFA Dispute Resolution Chamber (DRC), which upheld the claim and rejected a counterclaim in June 2013. The club then appealed to the CAS and in a somewhat bizarre occurrence, its counsel, a lawyer based in Brussels, suddenly dropped off the radar screen and stopped answering any communications from the CAS. However he appears to have sent a Lausanne lawyer to the hearing as a “substitute” for him. The Panel ( chairman Stuart McInnes with arbitrators Bernard Hanotiau and Michael Geistlinger) gave the Lausanne lawyer an hour and a half to produce a written power of attorney. He could not and the hearing went ahead without the Appellant’s presence.
Subsequently a Portuguese lawyer intervened upon receipt of a letter sent by the CAS to the club directly, in desperation at failing to obtain any answer from the Brussels lawyer. The Portuguese lawyer asked for a new hearing, which was rejected, but he was given the opportunity to file an additional brief.
On December 23, 2014, the CAS rejected the appeal and upheld the DRC decision. An appeal was made to the Federal Tribunal and this is yet another example of an appeal that should never have been filed.
An argument was made that, by failing to grant a new hearing, the CAS Panel breached the adversary principle. This was rejected out of hand, rightly, because it obviously behooves a party to make sure that once a lawyer is instructed, he performs adequately. If he fails to inform his client, that is not an excusable error from the party’s point of view (see Section 3.2.2 of this opinion in this respect).
A second argument, equally hopeless, of breach of substantive public policy was made and the Court recalled its often-stated view that the contractual interpretation process is outside the scope of substantive public policy (see Section 4.2 of the opinion in this respect).
Judgment of April 29, 2015
First Civil Law Court
Federal Judge Kiss (Mrs.), Presiding
Federal Judge Klett (Mrs.)
Federal Judge Niquille (Mrs.)
Clerk of the Court: Mr. Carruzzo
A.________ Sport Club,
A.a. B.________ is a retired professional footballer who played with internationally renowned European clubs despite a heart condition affecting him throughout his career.
A.________ Sport Club (hereafter: the Club) is a professional football club based in X._________ and affiliated with the C._________ Federation.
By way of a June 25, 2010, contract, the Club hired him for the period between July 1, 2010, and May 31, 2012. In the spring of 2011, it took the initiative to terminate this contractual relationship, which the Player did not accept.
A.b. On August 12, 2011, B.________ took the Club to the Dispute Resolution Chamber (DRC) of the Fédération Internationale de Football Associations (FIFA), raising various claims based on the aforesaid contract.
The Defendant opposed the claim and filed a counterclaim.
In a decision of June 28, 2013, the DRC ordered the Club to pay EUR 91’000 to the Player as salary for the month of May 2011 and EUR 670’000 as compensation for unjustified breach of contract. The counterclaim was rejected.
B.a. On December 15, 2013, the Club, represented by Mr. Y.________, an attorney at the bar of Brussels (Belgium), seized the Court of Arbitration for Sport (CAS) of an appeal against the DRC decision. The Appeal brief with exhibits was filed by the Belgian lawyer on January 7, 2014.
B.________, the Respondent in the appeal, filed its answer with exhibits on January 27, 2014.
A three-member Panel was constituted to handle the Club’s appeal. The parties were advised thereof on February 25, 2014.
On March 5, 2014, the CAS informed the representatives of the parties that the Panel had decided to hold a hearing in the case. It asked that by the 7th of the same month, they state whether or not the day of May 13, 2014, anticipated for this purpose, would be convenient. Counsel for the Player answered in the affirmative on the same day whilst the Club’s asked for an extension until March 13, 2014, which was granted until March 11, 2014.
By fax of March 13, 2014, the CAS, which had received no answer from the Appellant, advised the representatives of the parties that the hearing would take place in Lausanne on the anticipated date. It invited them to provide it with a list of the persons who would attend by March 20, 2014. The Respondent provided the requested information in a fax of March 19, 2014. However, the Appellant did not react despite the reminders sent to his counsel on March 19 and 26, 2014, and for the last time on April 23, 2014.
On May 7, 2014, the CAS sent a procedural order concerning the upcoming hearing to the representatives of the parties, asking them to sign it and to return it by May 12, 2014. Counsel for the Respondent did so the same day while the Appellant’s did not react to this invitation.
The hearing was held in a Lausanne hotel on May 13, 2014. Before it started, a Lausanne lawyer appeared before the Panel stating that Mr. Y.________ asked him to appear on his behalf for personal reasons, of which he himself was not aware. As he was not in possession of a power of attorney, the Panel gave him one and a half hours to obtain clarification from Brussels and from Club B.________ but it was in vain. Thus, he was not authorized to represent the Appellant at the hearing, which resumed two hours later with the Respondent’s deposition, as he had flown from California for this purpose, and his two agents.
The next day, the CAS sent to the representatives of the parties a fax and a letter reminding them of the special circumstances of the hearing in question. A CD containing a recording of the hearing was attached. The Club was given 10 days to present any remarks or objections as to the conduct of the hearing and as to the depositions of the Player and his two witnesses, with a view to safeguarding its rights. Within the same time limit, the Respondent could also send his comments as to the conduct of the hearing of May 13, 2014.
The Respondent’s counsel stated in a fax of May 23, 2014, that the manner in which the hearing was held was beyond criticism so that the Panel was invited to decide as soon as possible.
By fax and email of June 10, 2014, the CAS wrote to the Club directly to point out that it had received no communication from Mr. Y.________ since March 7, 2014, despite sending numerous reminders. It related the circumstances in which the hearing of May 13, 2014, took place and asked if it was still in contact with the Brussels lawyer and if he was still representing them in the pending proceedings. The same day, the CAS sent a fax to this lawyer giving him until June 20, 2014, to take possession of its letter of May 14, 2014, at the Brussels office of DHL and to state any observations as to the recording of the aforesaid hearing. Counsel for the Appellant did not comply and the parties were advised of that in a fax of June 23, 2014.
On July 28, 2014, Mr. Z.________, attorney at the bar of Lisbon (Portugal), advised the CAS that he was now representing the Appellant. In his fax, the Portuguese lawyer explained with exhibits in support that the Appellant had heard about the May 13, 2014, hearing only when it received the CAS fax of June 10, 2014, that since then it tried in vain to contact the Brussels lawyer and that it finally resolved to withdraw his power of attorney on July 24, 2014, to hire a new lawyer. Under such conditions, Mr. Z.________ applied for a new hearing, during which the Appellant’s witnesses would be heard and oral arguments submitted.
In a long fax of August 1, 2014, the Respondent’s counsel strongly opposed a new hearing.
In a fax of August 6, 2014, the CAS advised the parties that the Appellant’s ad hoc request was rejected by the Panel but that, considering the exceptional circumstances of the case at hand, a time limit expiring on August 13, 2014, was given to the new counsel for the Appellant to submit a brief not exceeding 10 pages upon receipt of which the Respondent would be given the possibility to state his views.
The time limit was extended until May [sic] 22, 2014, and counsel for the Appellant sent a brief to the CAS by fax with new submissions on the merits.
Counsel for the Respondent made his observations as to this brief in a fax of September 1, 2014.
By faxes of October 31, and November 5, 2014, the Respondent and the Appellant answered a question asked by the Panel in connection with the submissions made in the appeal proceedings as to the DRC decision.
B.b. In an award of December 23, 2014, the CAS rejected the appeal and confirmed the decision under appeal. In short, the Panel held that contrary to what the Appellant claimed, the employment contract it had signed with the Respondent did not automatically terminate on May 1, 2011, when the Player received medical advice confirming his permanent incapacity to be a professional football player. Moreover, it held that the Player’s health condition was not sufficient ground for the Club to terminate the Respondent’s employment contract unilaterally. In support of this, the Panel relied on Art. 18(4) of the Regulations on the Status and Transfer of Players (RSTP), pursuant to which the validity of the Contract cannot depend upon the positive result of a medical examination and it held this provision applicable throughout the contractual relationship. Rejecting the second argument advanced by the Club to dismiss its Player, the Arbitrators reached the conclusion that the contract in dispute was terminated without cause pursuant to Art. 17 RSTP. They then relied on this provision and related case law as well as the clauses of the employment contract to calculate the compensation to be paid by the Club to its former Player.
On February 2, 2015, the Club (the Appellant) filed an appeal written in English against the aforesaid award, which had been notified on January 21, 2015. Invited by presidential decision of February 3, 2015, to submit by March 4, 2015, an appeal brief written in one of the official languages of Switzerland, the Appellant complied in due course and submitted a brief written in French. Arguing that the CAS violated the principle of contradiction (Art. 190(2)(d) PILA2) and that it issued an award incompatible with public policy (Art. 190(2)(e) PILA), it submits that the award under appeal should be annulled.
On March 10, 2015, the Appellant applied to the Federal Tribunal for a stay of enforcement. Asked for his views on this request, the Respondent Player submitted that it should be rejected in a brief of March 30, 2015. In a separate brief of the same day, he asked that the Appellant should provide a security for costs.
On April 1, 2015, the CAS sent the file of the case to the Federal Tribunal.
According to Art. 54(1) LTF,3 the Federal Tribunal issues its judgment in an official language,4 as a rule in the language of the decision under appeal. When the decision is in another language (here English) the Federal Tribunal uses the official language chosen by the parties. Before the CAS, they used English. In the second brief sent to the Federal Tribunal, the Appellant used French whilst the first brief was written in English. In accordance with its practice, the Federal Tribunal shall consequently issue its judgment in French.
A civil law appeal is admissible against international arbitral tribunals pursuant to the requirements of Art. 190 to 192 PILA (Art. 77(1)(a) LTF). Whether as to the subject matter of the appeal, the standing to appeal, the time limit to appeal, the correction of the appeal brief made within the time limit given according to Art. 42(6) LTF, the Appellant’s submissions, or the grievances raised in the appeal brief, none of these admissibility requirements raises any problem in the case at hand. There is no reason not to address the merits.
3.1. In a first argument, the Appellant claims a violation of the principle of contradiction guaranteed by Art. 182(3) and 190(2)(d) PILA, which requires that each party must have the possibility to state its views on its opponent’s arguments, to examine and discuss the evidence introduced by the latter, and to refute it with its own evidence (judgment 4A_486/2014 of February 25, 2015, at 6 and the precedents quoted).
The Appellant submits that having no news from Mr. Y.________ since March 7, 2014, he heard of the May 13, 2014, hearing only in the fax sent by the CAS office on June 10, 2014, so that it could not introduce its witnesses, cross-examine the Respondent’s witnesses, and argue its case. In its view, its first counsel is responsible because it ignored the various notices and injunctions received from the CAS. According to the Appellant, however, the Panel had the opportunity to complete the examination of the case on the basis of Art. R44.2 and R44.3 of the Code of Sport Arbitration (hereafter: the Code). By failing to do so, it violated the fundamental adversarial principle, thus creating inequality between the parties in the defense of their rights and therefore violating Swiss public policy.
3.2. The Appellant’s first argument cannot be admitted as submitted.
3.2.1. It will be noted from the outset that the party claiming to be the victim of a violation of its right to be heard or of another procedural deficiency must raise it immediately in the arbitral proceedings under penalty of forfeiture. It is indeed contrary to good faith to invoke a procedural deficiency only in the framework of an appeal against the arbitral award when the deficiency could have been raised during the proceedings (judgment 4A_274/20125 of September 19, 2012, at 3.1).
In the case at hand, the new counsel for the Appellant did challenge, in his first communication to the CAS on July 28, 2014, the fact that his client was unrepresented at the May 13, 2014, hearing, thus being unable to exercise its rights as a party. He even formally requested a new hearing. However, after being informed on August 6, 2014, of the rejection of this request, the Portuguese lawyer took a much less clear-cut position. Indeed, in his fax of August 22, 2014, the issue of the hearing was confined to four lines of preliminary observations without any specific submissions in this respect at the end of the brief in connection with the alleged deficiency gravely affecting his client’s procedural rights. Moreover, in the last brief he submitted to the CAS on November 5, 2014, there was no longer any reference to the procedural deficiency previously argued, though the latter brief concerned a specific issue.
Still, one could have expected that new counsel for the Appellant would persist in his formal and categorical opposition to an award before a new hearing until the end of the examination of the dispute and undertake everything to compel the Panel to reconsider the negative decision it had taken in this respect. Instead, the Portuguese lawyer rather gives the impression that he kept the procedural deficiency in reserve to invoke it only, as the case may be, once the outcome of his client’s appeal would be known. In this context, one may also wonder why the Appellant waited for a month and a half before answering the CAS through new counsel after receiving the CAS letter of June 10, 2014, indicating that the Brussels lawyer was never heard from after March 7, 2014.
3.2.2. Besides this issue of forfeiture of rights, the Appellant’s argument does not appear convincing.
According to Art. 57(4) of the Code, if one party duly summoned does not appear at the hearing, the Panel may nonetheless hold the hearing. In the case at hand, the Appellant does not dispute that the various invitations to participate in the hearing of May 13, 2014, were validly sent to Mr. Y.________, according to Art. R31(1) of the Code, nor that its former counsel received them. As to the first issue, the power of attorney issued to the Brussels lawyer by the Appellant on December 12, 2013, and attached to the appeal statement of December 15, 2013, shows that the signatory asked those who would use it to send any correspondence to the office of that lawyer, the address, telephone, and fax of whom were in the document header. This invitation was indeed repeated at n. 1 of the last paragraph of the appeal statement. That the CAS decided, after several fruitless attempts at obtaining an answer from Mr. Y.________, to contact the Appellant directly was a gesture of goodwill changing which does not change the regularity of the notifications previously made through this lawyer. As to the second issue, the actual receipt by the Belgian lawyer of the CAS notifications is indirectly confirmed by the presence of the Lausanne lawyer at the aforesaid hearing when he stated he had been retained by his Brussels colleague to substitute for him on short notice. The Appellant does not challenge the regularity of the Panel’s decision not to authorize the Lausanne lawyer to appear at the hearing pursuant to Art. R30 of the Code because the latter could not obtain a written confirmation of his appointment within the hour and a half he had been given for this purpose. Moreover, the decision to hold the hearing despite the Appellant’s absence is hardly questionable in the case at hand as the Respondent and his two witnesses came from Los Angeles and Amsterdam with a view to being heard by the Panel. One must also bear in mind that the case in dispute concerned claims based on an employment contract and that it had been pending since August 12, 2011, when it was introduced in the DRC, so that, as a retired football player, the Respondent could legitimately expect a decision within the foreseeable future.
The Appellant may be arguing in good faith when claiming to only have heard about the hearing held on May 13, 2014, when it received the CAS facts of June 10, 2014. It may also be right when blaming its former counsel for its failure to appear at the hearing. However, these are circumstances concerning the party itself as to the former and as to the latter the performance of the contract between that party and its former representative, a set of circumstances alien to the opposing party, i.e. the Respondent, which are not decisive in the case at hand. It must be recalled that in Swiss civil procedure, as an example, a party’s representative’s failure to accomplish a procedural step or to appear at a hearing is attributed to the represented party, which has to live with the consequences itself (ATF 118 II 86 at 2; 114 II 181 at 2; Adrian Staehelin, Kommentar zur Schweizerischen Zivilprozessordnung (ZPO), Sutter-Somm, Hasenböhler, and Leuenberger [ed.], 2nd ed. 2013, n. 4, ad art. 147 CPC and n. 7 ad art. 148 CPC; Nina J. Frei, Commentaire bernois, vol. I, 2012, n. 1, ad art. 147 CPC and n. 25 ad art. 148 CPC). Although Swiss law is applicable only in the alternative in the case at hand because the decision submitted to the CAS was issued by a jurisdictional body of FIFA, an association headquartered in Zürich, and only as to the merits according to the very title of Art. R58 of the Code. However, in the silence of the Code and failing any specific rules adopted by the parties, nothing prevents this Court from drawing inspiration from the aforesaid principle itself drawn from civil procedure to decide the issue in dispute, particularly because the aforesaid principle is connected to a contractual relationship – the mandate between a party and its lawyer – which certainly falls within substantive law. It must therefore be admitted that before the CAS, the Appellant could not invoke, and even less against the Respondent, the alleged mismanagement of its former counsel with a view to obtaining a new hearing. As the case may be, it must blame the previous lawyer and demonstrate that the outcome of the appeal proceedings could have been different if, duly advised by him that a hearing would be held on May 13, 2014, it would have been able to participate and to introduce evidence and present its arguments to the Panel.
Furthermore, the Appellant refers to Art. R44.2 and R44.3 of the Code to which Art. R57(3) of the Code refers for appeal arbitration proceedings. It quotes the following passage of Art. R44.3(2) of the Code: “If it deems it appropriate to supplement the presentations of the parties, the Panel may at any time order the production of additional documents or the examination of witnesses, appoint and hear experts, and proceed with any other procedural step.” According to the Appellant, the Panel violated the principle of contradiction by failing to use this authority in the case at hand. As presented, the argument fails. First, the provision quoted merely states a power given to the Panel and left to its discretion, even though it is true that this opportunity cannot be assimilated to discretionary power in all cases (aforesaid judgment 4A_274/20126, at 3.2.1). Accordingly, it would be wrong to see there a right given to the party in default to set aside the consequences of its default or that of its counsel indirectly and to be placed back into the same position it would have been in if it had immediately complied with the Panel’s injunctions. Moreover, the Appellant does not even provide a summary explanation as to which new evidence or factual and/or legal pertinent arguments it would have been able to submit should a new hearing have been ordered. Finally and above all, it fails to point out that, as a matter of exception, the Panel gave it the opportunity to submit in writing the arguments it could have invoked had it participated in the May 13, 2014, hearing.
This being so, the argument based on Art. 190(2)(d) PILA appears unfounded, even if the Appellant did not forfeit its right to invoke it.
4.1. In a second argument, the Appellant submits that the CAS issued an award inconsistent with public policy within the meaning of Art. 190(2)(e) PILA. Specifically, it argues that the Panel failed to take into consideration that the employment contract is a reciprocal bilateral contract and thus allocated to the Respondent some amounts based on the June 25, 2010, contract, despite the fact that the employee was permanently unable to provide services to his employer. According to the Appellant, the Panel also wrongly interpreted or wrongly applied Art. 18(4) RSTP and Art. 336c of the Swiss Code of Obligations (CO), applicable in the alternative.
4.2. An award is incompatible with public policy if it disregards the essential and broadly acknowledged values which, according to prevailing concepts in Switzerland, should be the basis of any legal order (ATF 132 III 389 at 2.2.3). It is contrary to substantive policy, which is the only one to be considered in the case at hand, when it violates some fundamental principles of the law applicable to the merits to such an extent that it is no longer consistent with the controlling legal order and system of values. Whilst it is not easy to define substantive public policy positively and to set its boundaries with precision, it is easier to exclude one item or another from it. Such exclusion concerns in particular the entire process of interpreting a contract and the legal consequences logically drawn therefrom as well as the interpretation of the statutory provisions of a private law body by an arbitral tribunal. Moreover, to be incompatible with public policy – a concept more restrictive than arbitrariness – it is not sufficient for the evidence to have been wrongly assessed, a factual finding manifestly wrong, or a rule of law clearly violated (judgment 4A_304/20137 of March 3, 2014, at 5.1.1). The Appellant disregards this case law in seeking to demonstrate that the Panel misinterpreted the concept of employment contracts and erroneously applied a regulation of FIFA or an article of CO. Its argument based on Art. 190(2)(e) PILA is therefore doomed.
The Appeal must be rejected and the request for a stay of enforcement becomes moot.
The Appellant loses and shall therefore pay the federal judicial costs (Art. 66(1) LTF). It shall also compensate the Respondent in connection with his submission filed on March 30, 2014, upon the invitation of the Federal Tribunal, as to the stay of enforcement (Art. 68(1) and (2) LTF). However, the Respondent was not asked to submit an answer on the merits and cannot be compensated in this respect.
The Respondent asked for security for costs (Art. 62(2) LTF). However, this was done on the very day the observations concerning the Appellant’s request for a stay of enforcement was filed, thus at a time when the expenses in this respect had already been made so that it must be declared moot (judgment 4A_188/2007 of September 13, 2007, at 1.4 and the cases quoted; Bernard Corboz, Commentaire de la LTF, 2nd ed. 2014, n. 27 ad art. 62 LTF).
Therefore the Federal Tribunal pronounces:
The appeal is rejected.
The judicial costs set at CHF 9’000 shall be borne by the Appellant.
The Appellant shall pay an amount of CHF 500 to the Respondent for the federal judicial proceedings.
The Respondent’s request for security for costs is moot.
This judgment shall be notified to the representatives of the parties and to the Court of Arbitration for Sport (CAS).
Lausanne, April 29, 2015
In the name of the First Civil Law Court of the Swiss Federal Tribunal
Presiding Judge: Clerk:
Kiss (Mrs.) Carruzzo
- 1. Translator’s Note: Quote as A.________ Sport Club v. B.________, 4A_70/2015. The original of the decision is in French. The full text is available on the website of the Federal Tribunal, www.bger.ch.
- 2. 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.
- 3. Translator’s Note: LTF is the French abbreviation of 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: The English translation of this decision is available here: http://www.swissarbitrationdecisions.com/application-set-aside-rejected-federal-tribunal-party-considering-its-right-be-heard-has-been
- 6. Translator’s Note: The English translation of this decision is available here: http://www.swissarbitrationdecisions.com/application-set-aside-rejected-federal-tribunal-party-considering-its-right-be-heard-has-been
- 7. Translator’s Note: The English translation of this decision is available here: http://www.swissarbitrationdecisions.com/definition-public-policy-reaffirmed