Game changer: CJEU confirms sports arbitration awards may be subject to EU court review

The Court of Justice of the European Union has reinforced its position that sports arbitration awards are not immune from judicial scrutiny, where EU rights are at stake.

This confirms that individuals must have access to effective judicial review when sports sanctions affect their fundamental freedoms under EU law.

In this article, Ogier's Sports and Dispute Resolution team in Ireland considers the significance of the Court of Justice of the European Union (CJEU) ruling and what it could mean for the future of sports arbitration in the European Union.

Background to the FIGC case

The Italian Football Federation's (FIGC) independent disciplinary body, Procure Federale, brought disciplinary proceedings against a former chairman and a former member of the board of directors of Juventus Football Club (the Respondents), for allegedly participating in a system of artificial capital gains in excess of €60 million. It was alleged that they made or approved declarations in Juventus’ financial statements, falsely presenting a set of transfers of players as independent transactions, where they were in fact exchange transactions, with the aim of evading the application of the international accounting standard. The Respondents were initially acquitted of the charges.

Following the receipt of further information arising from a parallel criminal investigation, the appeal body accepted an application to revise the original decision and impose a disciplinary sanction on the Respondents prohibiting the pursuit of professional activities within the FIGC for a period of 24 months. That prohibition, which in practice covers the pursuit of any professional activity in the sphere falling within the remit of the FIGC - namely professional or amateur football in Italy - was subsequently extended globally by the FIFA Disciplinary Committee.

Appeal to the Sport Guarantee Board

The Sport Guarantee Board of the Italian National Olympic Committee, a body governed by public law that is responsible for coordinating the activities of the various Italian sports associations, rejected an appeal by the Respondents. While Italian law allowed for that decision to be challenged before the Italian courts, that court's power was limited to awarding compensation, and did not allow for interim relief (an injunction) or annulment of the sanctions.

Since the global breadth of the sanctions restricted the free movement of the Respondents to work and / or provide services in other EU member states, EU law was triggered. The Respondents challenged the sanctions before the Regional Administrative Court in Lazio, Italy, which in turn referred three questions to the CJEU under Article 267 TFEU's preliminary reference mechanism.

Outcome of the CJEU reference

The CJEU held that national sports associations could impose the sanctions imposed on the Respondents provided that the provisions providing for the sanction pursue a legitimate objectives in the public interest. The CJEU held that the Italian rules pursued that objective by promoting the proper conduct of football competitions through effective compliance with financial and accounting standards for football clubs, as well as the accuracy and fairness of the financial statements made or approved by their directors.

The Court also emphasised that the relevant provisions must be subject to transparent, objective and non-discriminatory criteria that all relevant circumstances to be taken into account and  are amenable to effective judicial review

As in the FC Seraing case, the CJEU confirmed that individuals have a right to effective judicial review when they claim that a sanction imposed by a sports association has infringed their EU public policy rights, such as the fundamental freedoms of movement guaranteed under EU law. The reviewing national court hearing must have full jurisdiction to examine all relevant questions of fact and law, including the ability to make a preliminary reference to the CJEU under Article 267 TFEU.

See our article on the CJEU's ruling in the case of FC Seraing here.

If a national court finds an infringement, it must have the power to take appropriate action. This means the court must be able to stop any ongoing breach or  annul that decision where the infringement arises from a specific decision.

The CJEU also clarified the requisite characteristics of the judicial body that can provide that "effective judicial review":

• a "court or tribunal" within the meaning of EU law, providing the requisite guarantees of independence and impartiality
• previously established by law, as regards its existence, composition and organisation
• has a judicial function
• the procedure before it offers the requisite guarantees, in particular those relating to respect for the rights of the defence and observance of the principle that the parties should be heard
• it in a position to exercise prior effective judicial review of that sanction

What does this decision mean for sports arbitration in the EU?

The CJEU's decision affirms the principle established in the case of FC Seraing that measures involving sports-related economic activity within the European Union must be amenable to effective judicial review in EU member state courts where EU public policy is at issue. The CJEU also prescribed the requisite characteristics of judicial bodies that can provide effective judicial review.

These conditions excludes the authority of the Court of Arbitration for Sport and its appellate court, the Swiss Federation Tribunal, to perform effective judicial review of decisions where one or more EU law fundamental freedoms have been infringed.

It may also render any decision involving consideration of EU law fundamental freedoms by national sports arbitration bodies, such as Sports Disputes Solutions Ireland, to be amenable to review by the relevant member state court.

In light of this ruling, sports federations and national legislators should consider a number of practical steps. At the international level, federations could follow the approach taken by UEFA and provide for the seat of arbitration in an EU member state, which could limit preliminary references to one EU member state. At the national level, member states should consider amending their sports arbitration statutes to ensure that they meet the requirements for effective judicial review prescribed by the CJEU.

These measures would help ensure that sports disputes continue to be resolved primarily through specialist sports arbitration, which offers both the expertise and procedural efficiency required in the sporting context.

How Ogier can help

Our Sports and Dispute Resolution team have wide-ranging expertise in sports matters and act for a number of professional organisations both in Ireland and internationally. For more information on arbitration or sports law advice, contact the team via the details provided.

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

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