Can one choose the “Lex Sportiva” to govern a contract? – A Glance at the Federal Supreme Court of Switzerland

The “Lex Sportiva” is a hotly debated concept at the moment. While some commentators promote the “Lex Sportiva” and try to define its content and characteristics others are reluctant to recognize its very existence (see e.g. Frank Latty, La Lex Sportiva (Martinus Njihoff Publishers 2007); for a recent contribution see Lorenzo Casini, The Making of a Lex Sportiva: The Court of Arbitration for Sport “The Provider”, IILJ Working Paper 2010/5 Global Administrative Law Series, available at http://www.iilj.org/publications/2010-5.Casini.asp). In this context the question may arise as to what significance should be attached to a contractual choice-of-law clause wherein the parties refer to the “Lex Sportiva” (here understood as “l’ensemble des normes coutumières privées qui se sont dégagées de l’interaction entre les normes de l’ordre juridique sportif et des principes généraux propres aux ordres juridiques étatiques, telles qu’elles se concrétisent dans les arbitrages sportifs” (Antoni Rigozzi, L’arbitrage international en matière de sport, 628 (Helbing & Lichtenhahn, L.G.D.J./Bruylant, 2005)? Further, one might also wonder whether in international arbitration the arbitrators themselves can apply the “Lex Sportiva” to the merits of the dispute. While these questions are too complex to be answered in this short note, I would try to shed some light on them by having a glance at Swiss law, especially the case law of the Federal Supreme Court of Switzerland. Swiss law is of particular interest since Switzerland is the seat of all arbitration proceedings before the Court of Arbitration for Sport “CAS” (Rule 28 of the CAS Code 2010 Edition), and a relevant amount of sports law disputes are adjudicated by Swiss state courts.

Swiss law provides parties to state court proceedings with great autonomy in choosing the law applicable to a contract (Article 116 of the Swiss Code on Private International Law “PILA”). This autonomy is even greater in international arbitration proceedings with its seat in Switzerland. Parties, and the arbitrators themselves, are allowed to apply “rules of law”, as opposed to a “law”, to govern the merits of the dispute (Article 187 Para 1 PILA; see, e.g., Jean-François Poudret & Sébastien Besson, Comparative Law of International Arbitration, 603 (Sweet & Maxwell, 2nd edition, 2007)).  Hence, scholarly writers almost unanimously suggest that in international arbitration non-state law such as for example the “Lex Mercatoria” can be applied to the merits (Id. at 603-604). The question whether the “Lex Sportiva” constitutes such “rules of law” is disputed amongst scholars (Ulrich Haas, Die Vereinbarung von “Rechtsregeln” in (Berufungs-) Schiedsverfahren vor dem Court of Arbitration for Sport, CaS 2007 271, 272 (who also provides a good overview over the relevant case law of the CAS); see also Jean-François Poudret & Sébastien Besson, Comparative Law of International Arbitration, 604 (Sweet & Maxwell, 2nd edition, 2007)).

The Federal Supreme Court of Switzerland has, to date, issued only one decision dealing with a choice-of-law issue in the peripherals of the “Lex Sportiva” (Decision of the Federal Supreme Court of Switzerland of 20 December 2005, BGE 132 III 285). In that decision the court was reluctant to recognize the “Lex Sportiva” as a “law” under Article 116 of the PILA.

The parties in that case debated whether a statute of limitation rule contained in a set of rules issued by the FIFA prevailed over a mandatory statute of limitation rule of the Swiss Code of Obligations. The parties had stipulated the following provision in a transfer agreement: “This agreement is governed by FIFA rules and Swiss law”.  The state court of first instance held that the choice of FIFA rules constitutes a valid choice of law. It thus concluded that both FIFA rules and Swiss law shall apply, but that FIFA rules shall prevail over Swiss law as a matter of lex specialis. Accordingly, the court of first instance applied the FIFA statute of limitation and not the mandatory statute of limitation rule set forth in the Swiss Code of Obligations.

On appeal, the Federal Supreme Court of Switzerland reversed this decision. The court observed generally that according to Article 116 of the PILA the parties are free to choose the law applicable to their contract and that the law chosen supersedes all rules of the law otherwise applicable, whether mandatory or not. The court then questioned whether within the scope of Article 116 of the PILA the parties are allowed to choose a non-state law, such as the FIFA rules. After considering that this question was disputed amongst scholars, the court reasoned that bodies of rules and regulations issued by private organizations cannot be considered “law”, even in cases where they are elaborate and detailed. According to the court, such rules are subordinated to state law and apply only within the framework of state law. The court thus held that FIFA rules do not constitute “law” in the sense of Article 116 of the  PILA and neither can it be accepted as “lex sportiva transnationalis”. The court concluded that the FIFA statute of limitation rule cannot trump the mandatory statute of limitation rule of the Swiss Code of Obligations. However, the court accepted the integration of the FIFA rules into a contract. Accordingly, those rules were at least able to trump non-mandatory rules of Swiss Law.

It results from this decision that the parties to a dispute before Swiss state courts cannot choose rules issued by private organizations. Not even in the case where one regards them as forming part of the “Lex Sportiva”. The court expressly rejected the recognition of the “Lex Sportiva” as a “law” under Article 116 of the PILA. However, in my view, nothing speaks against incorporating private rules and regulations as well as particular rules of the “Lex Sportiva” in a contract. But it bears emphasis that such contractual provisions can only prevail over non-mandatory provisions of Swiss law.

Not addressed in the said decision was the question whether the concept of “Lex Sportiva” could be recognized as a “rule of law” according to Article 187 Para 1 of the PILA in the context of international arbitration. Hence, this question remains open to debate. One could argue that the Federal Supreme Court of Switzerland in the said decision expressed a general concern regarding the concept of “Lex Sportiva” and it would thus answer the question in the negative. However, the Federal Supreme Court of Switzerland attaches great importance to the policy of arbitration friendliness inherent in the PILA and it might thus adopt a different view in an international arbitration context.

Simone Stebler

Simone Stebler, who is an Arthur T. Vanderbilt Scholar and LL.M. candidate in International Business Regulation, Litigation and Arbitration of the New York University School of Law, graduated summa cum laude from the University of Fribourg Law School in Switzerland in 2005. She was an exchange student at the University of Paris II Panthéon-Assas in 2003.  In 2007, Simone Stebler was admitted to the Basel Bar. In 2008, Simone Stebler joined the renowned dispute resolution boutique Nater Dallafior, where she has been engaged in international commercial and sports arbitration as well as in corporate and commercial litigation.

The Center for Transnational Litigation and Commercial Law aims at the advancement of the study and practice of international business transactions and the way to solve related disputes either through litigation or arbitration. As commercial transactions become increasingly international, it is vital to the legal and business communities to understand and analyze the practices and legal principles that govern relationships between firms and between firms and consumers in the international arena