Article 178 of the Swiss International Private Law Act (PILA) states:

Article 13 of the FIFA Regulations on the Status and Transfers of Players (RSTP) provides that a contract between a professional and a club may only be terminated upon expiry of the term of the contract or by mutual agreement.

Article 22(a) of the RSTP states:

On 1 January 2007, soccer player X signed an employment agreement with a soccer club (the Old Club) with a termination date at the end of the 2009-2010 season. On 15 February 2008, X entered into an employment contract with another soccer club (the New Club). As the Old Club refused to deliver an International Transfer Certificate (ITC), required to transfer between two national soccer associations, the New Club sent a fax to the Fédération Internationale de Football Association (FIFA) to obtain the delivery of the ITC. The New Club claimed that the Old Club and X had terminated their employment contract by mutual agreement in accordance with Article 13 of the RSTP. X signed this fax to confirm these facts. On 4 April 2008, X wrote a letter to the FIFA in support of the application and requested that an ITC be delivered. He also wrote that he intended to take the matter to state court, that "the various arbitration clauses [contained in the RSTP in favor of FIFA and the Court of Arbitration for Sport ("CAS")] are not binding upon [me]" and that, in any event, "they are hereby formally rejected."

Notably, X's contract with the Old Club contained no arbitration clause, and while his contract with the New Club did, it was never at issue in this dispute.

On 11 April 2008, the sole judge of X's Status Committee provisionally authorised the New Club to register X. On 12 June 2008, the Old Club filed a complaint against the New Club and X before the FIFA Dispute Resolution Chamber (DRC) claiming breach of and interference with the contract. On 16 April 2009, the DRC issued a € 900'000 fine against the New Club and X, suspended X for four months and prohibited the New Club from recruiting new players for two registration periods.

On 18 June 2009, X appealed the DRC decision to the CAS "to safeguard his rights" only. X contested the jurisdiction of the CAS, repeating the arguments from his 4 April 2008 letter. X also brought suit before a state court in Zurich to set aside the DRC's decision. On 7 October 2009, a panel of the CAS rendered a partial award on lis pendens and jurisdiction (Partial Award) and declared that it had jurisdiction to hear the matter.

On 6 November 2009, X filed a petition to set aside the Partial Award with the Swiss Federal Tribunal. He limited his appeal to the issue of jurisdiction and did not contest the Partial Award on lis pendens.

The Swiss Federal Tribunal rejected the petition. This legal update focuses on the most notable aspect of the decision relating to X's agreement to arbitrate (or lack thereof), contained in consideration No. 4 of the Federal Tribunal's decision.

The Federal Tribunal noted that in sports arbitration, the Federal Tribunal applies a certain "liberalism" when ascertaining whether there was consent to arbitrate, favouring a quick resolution of disputes by specialised tribunals like the CAS that present sufficient guarantees of independence and impartiality. This "liberalism" is particularly applied with respect to arbitration clauses by reference; and, on the basis of the principles of good faith, conduct can, to a certain extent, substitute for form. This, according to the Federal Tribunal's view, is consistent with what is at the heart of the form requirement of Article 178 PILA, namely the determination of a party's consent to submit to arbitration.

Here, the Federal Tribunal determined that X's conduct reflected such consent. X together with his New Club applied for an ITC with the RSTP. The Federal Tribunal found that the prerequisites of Article 22(a) of the RSTP were clearly met here.

X had to know that his application for an RTC would trigger the dispute resolution procedure of the RSTP. The Federal Tribunal insisted that it was not important that the New Club had presented the request for a ITC, but that X supported and thereby "concretely and effectively participated in" this procedural request. It would be "incompatible with the principles of good faith" for X to present an ITC request to FIFA by invoking the RSTP, while at the same time refusing to participate in the dispute resolution procedure provided in those rules. Accordingly, the reservation on jurisdiction contained in the player's letter of 4 April 2008 was ineffective.

Moreover, X participated in the DRC in the Old Club's breach of contract action without raising any jurisdictional objection.

The Federal Tribunal held that by engaging in this behaviour, X had subjected himself to the dispute resolution mechanism of the FIFA. By submitting to the jurisdiction of the FIFA, X also, pursuant to the rules of the FIFA and the CAS, had no basis to object to the jurisdiction of the CAS.

This decision remarkably extends the Federal Tribunal's "liberalism" in accepting the jurisdiction of an arbitral tribunal in sports arbitration. X had signed no relevant agreement containing an arbitration clause, and had specifically objected to the FIFA dispute resolution mechanisms. In previous landmark decisions, the Federal Tribunal, at a minimum, required that there was a written arbitration clause independently of whether it was signed by both parties (see decision of 16 January 1995, DFT 121 III 38).

Even more importantly, before extending an arbitration clause to a third party that did not sign the original contract, the Federal Supreme Court required that the formal requirement of Article 178(1) PILA applied at least to the original arbitration agreement (decision dated 16 October 2003, DFT 129 III 727). In the present case, there was no original arbitration agreement fulfilling the form requirement. Rather, the Federal Tribunal admitted the jurisdiction of the arbitral tribunal based on consent derived from X's conduct, and on considerations of good faith.

While paying lip service to Article 178(1) PILA, little remains of the form requirement in sports arbitration following this decision. The Federal Tribunal has shifted the inquiry on the jurisdiction of arbitral tribunals from a question of form to a question of consent. Unless it extends this shift to commercial arbitration as well, this case is part of what appears to be to a growing disconnect between the application of Chapter 12 PILA in sports arbitration decisions and the Federal Tribunal's more traditional jurisprudence in commercial arbitration.