De facto unlimited prohibition to work as a football player as a violation of public policy.

• Author: Steingruber, Andrea Marco
• Position: MATUZALEM: CAS AWARD SET ASIDE ON THE GROUND OF PUBLIC POLICY

INTRODUCTION

On March 27, 2012, the Swiss Federal Tribunal upheld an appeal of the football player Francelino da Silva Matuzalem ("Matuzalem") and annulled the relevant parts of the Court of Arbitration for Sport ("CAS") award of June 29, 2011, that confirmed the possibility that he could be banned from football activities if he would not pay damages to his former club FC Shakhtar Donetsk. In his appeal Matuzalem had argued that the CAS award was de facto leading to a prohibition of working as a football player worldwide and forever and therefore amounted to a violation of public policy.

This article first gives an overview of Federation Internationale de Football Association ("FIFA") and the involved dispute resolution instances, then outlines the Matuzalem's saga, discusses public policy in general and according to Swiss law and finally considers the proceedings before the Swiss Federal Tribunal leading to the judgement of March 27, 2012.

1. The FIFA and the involved dispute resolution instances

   1.1. The FIFA

   The FIFA is an association governed by Swiss law, founded in 1904 and based in Zurich. (1) It has 208 member associations and its goal, enshrined in its Statutes, is the constant improvement of football. FIFA employs some 310 people from over 35 nations and is composed of a Congress (legislative body), Executive Committee (executive body), General Secretariat (administrative body) and committees (assisting the Executive Committee). (2)

   With regard to the admission as a Member of FIFA, Article 10 of the FIFA Statutes (2011) provides that:

   "1. Any Association which is responsible for organising and supervising football in its country may become a Member of FIFA. In this context, the expression "country" shall refer to an independent state recognised by the international community. Subject to par. 5 and par. 6 below, only one Association shall be recognised in each country.

   ....

4. The Association's legally valid statutes shall be enclosed with the application for membership and shall contain the following mandatory provisions:

   ...

   3. to recognise the Court of Arbitration for Sport, as specified in these Statutes. ...".

   1.2. The dispute resolution instances involved in the Matuzalem's saga: an overview

   1.2.1. FIFA's intern

   The Dispute Resolution Chamber ("DRC") is FIFA's deciding body that provides "dispute resolution on the basis of equal representation of players and clubs and an independent chairman. The DRC adjudicates on a regular basis in the presence of a varying composition of members. In total, the DRC includes 10 player representatives and 10 club representatives whereas decisions are regularly passed in a composition of 5 (2 player representatives, 2 club representatives, 1 chairman). The DRC is competent for employment-related disputes between clubs and players that have an international dimension as well as for disputes between clubs related to Training Compensation and Solidarity Mechanism." (3) The relevant decisions are published on FIFA.com. (4) DRC proceedings are free of charge.

   1.2.2. The Court of Arbitration for Sport (CAS)

   According to Article 62(1) of the FIFA Statutes (2011), "FIFA recognises the independent Court of Arbitration for Sport (CAS) with head-quarters in Lausanne (Switzerland) to resolve disputes between FIFA, Members, Confederations, Leagues, clubs, Players, Officials and licensed match agents and players' agents."

   Moreover, Article 10(4)(c) of the FIFA Statutes (2011) provides that the Association's legally valid statutes shall be enclosed with the application for membership and shall contain as a mandatory provision the recognition of the Court of Arbitration for Sport, as specified in the FIFA Statutes themselves. (5)

   According to Article 63(2) of the FIFA Statutes (2011) "recourse may only be made to CAS after all other internal channels have been exhausted."

   1.2.3. The Swiss Federal Tribunal

   The seat of the arbitral tribunal - Court of Arbitration for Sport - is in Lausanne, Switzerland. At the relevant times the appellant - Matuzalem - had his domicile outside Switzerland. As the parties did not rule out in writing the provisions of chapter 12 of the of the Swiss International Private Law Act ("SPILA"), they were applicable (Article 176(1) and (2) of the SPILA (6)).

   Awards rendered by arbitral tribunals with their seat in Switzerland can only be challenged before the Swiss Federal Tribunal. Indeed Article 191 of the SPILA provides that "setting aside proceedings may only be brought before the Swiss Federal Tribunal and that the procedure is governed by Article 77 of the Federal Supreme Court Act ("FSCA") of 17 June 2005."

   In the field of international arbitration a Civil law appeal is allowed pursuant to the requirements of Articles 190-192 of the SPILA (Article 77(1)(a) of the FSCA). In particular, Swiss law provides for only very limited options for setting aside arbitral proceedings rendered in Switzerland. In fact according to Article 190(2) of the SPILA:

   "The award may only be set aside:

1. if the sole arbitrator was improperly appointed or if the arbitral tribunal was improperly constituted;

2. if the arbitral tribunal wrongly accepted or declined jurisdiction;

3. if the arbitral tribunal ruled beyond the claims submitted to it, or failed to decide on one of the items of the claim;

4. if the principle of equal treatment of the parties or their right to be heard was violated;

5. if the award is incompatible with public policy."

2. The Matuzalem's saga

   2.1. Matuzalem's transfers which are relevant for the case

   Matuzalem is a professional football player of Brazilian citizenship who currently plays with the football club SS Lazio Roma. Earlier stations were FC Shakhtar Donetsk and Real Zaragoza SAD. (7)

   2.1.1. Employment contract with FC Shakhtar Donetsk and its termination

   On June 26, 2004 Matuzalem entered into an employment contract with the Ukrainian football club FC Shakhtar Donetsk for the time from July 1, 2004 until July 1, 2009. On July 2, 2007 Matuzalem terminated his employment contract with FC Shakhtar Donetsk without notice yet not for just cause nor for sporting just cause. (8)

   2.1.2. Employment contract with Real Zaragoza SAD

   On July 19, 2007 Matuzalem then entered into a new employment contract with Real Zaragoza SAD and agreed to play with the Spanish club for the next three seasons until June 30, 2010. Earlier in a letter dated July 16, 2007 Real Zaragoza SAD undertook to hold Matuzalem harmless for any possible damage claims as a consequence of the premature termination of the contract. (9)

   2.1.3. Transfer to SS Lazio Roma

   At the end of the 2007/2008 season Real Zaragoza SAD descended into the second Spanish football league. Pursuant to a July 17, 2008 agreement Real Zaragoza SAD transferred Matuzalem temporarily for the 2008/2009 season to SS Lazio Roma. (10) On July 22, 2008 Matuzalem accepted this temporary transfer and entered into an employment contract with the Italian club for the period between July 22, 2008 and June 20, 2011. (11)

   Although at the end of the 2008/2009 season Real Zaragoza SAD returned to the first league, on July 23, 2009 Real Zaragoza SAD agreed to the definitive transfer of Matuzalem to the SS Lazio Roma against payment of a transfer fee of [euro]5.1 million. (12) On the same day the SS Lazio Roma entered into a new employment agreement with Matuzalem which substituted the July 22, 2008 contract and set a fixed contractual duration until June 30, 2014. (13)

   2.2. The damages awarded FC Shakhtar Donetsk

   2.2.1. Decision of the Dispute Resolution Chamber of FIFA

   In a decision of November 2, 2007, the Dispute Resolution Chamber of FIFA awarded FC Shakhtar Donetsk damages as a consequence of the illicit termination of the contract in the amount of [euro]6.8 million with interest at 5% from 30 days after the award. (14)

   2.2.2. Award of the Court of Arbitration for Sport

   On May 19, 2009 the Court of Arbitration for Sport (CAS) annulled the decision of November 2, 2007 in part and ordered Matuzalem and the football club Real Zaragoza SAD severally to pay [euro]11'858'934 with interest at 5% from July 5, 2007. (15)

   2.2.3. Judgement of the Swiss Federal Tribunal

   A civil law appeal filed by Matuzalem and Real Zaragoza SAD against the CAS award of May 19, 2009 was rejected by the Swiss Federal Tribunal in a judgment of June 2, 2010 (16) to the extent that the matter was capable of appeal. (17) However in this previous judgement the Swiss Federal Tribunal merely pointed out that Matuzalem's obligation to a five years employment contract - for the time from July 1, 2004 until July 1, 2009 (18) - was not illicit from the point of view of privacy protection and also that it could not be found that Matuzalem was bound too tightly simply because he would have to answer for the damages arising as a consequence of a breach of contract. (19) On the other hand the judgment of June 2, 2010 did not decide the compatibility with public policy of disciplinary measures imposed by a federation in case of a failure to pay damages. (20)

   2.3. Non-compliance with the CAS award on damages

   2.3.1. Proceedings before the Disciplinary Committee of FIFA

   1. The institution of the proceeding

      On July 14, 2010 the Deputy Secretary of the Disciplinary Committee of FIFA informed Matuzalem and Real Zaragoza SAD:

   1. that disciplinary proceedings were commenced against them because they had not complied with the CAS award of May 19, 2009,

   2. that the corresponding...