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Supreme Court finds that CAS acted contrary to the principle of good faith
Practical Law UK Legal Update Case Report 0-506-3172 (Approx. 3 pages)
Supreme Court finds that CAS acted contrary to the principle of good faith
by Practical Law
| Published on 02 Jun 2011 • International, Switzerland |
PD Dr. Nathalie Voser (Partner) and Eliane Fischer (Associate), Schellenberg Wittmer (Zurich)
In a recent French-language decision dated 17 March 2011, published on 19 April 2011, the Swiss Supreme Court overturned parts of an award rendered by the Court of Arbitration for Sport (CAS). The Supreme Court held that the CAS had acted contrary to the principle of good faith and had thereby violated the parties' right to be heard. Despite having requested the parties to provide additional information on their expenses, the CAS had rendered its award without awaiting the parties' replies.
Facts
In a dispute opposing the claimants (A, B, C, D, E and F) and the respondent (X), a panel consisting of three arbitrators rendered its judgment on 27 September 2010. Under point five of its findings, it ordered the claimants to reimburse X the sum of CHF 35,000 for legal fees and other expenses incurred in connection with the proceedings.
On 27 October 2010, X brought a petition before the Supreme Court asking for the setting aside of point five of the findings on the grounds that its right to be heard had been violated.
Decision
The Supreme Court admitted the petition.
It recalled that it is generally recognised in arbitration proceedings that each party has the right to:
- Express itself on the relevant facts.
- Present its legal arguments.
- Offer evidence on pertinent facts.
- Participate in the hearings before the arbitral tribunal.
According to the Supreme Court, the question whether the CAS is, as a general rule, obliged to invite the parties' submissions on the allocation of the costs and the amount of their own expenses before rendering its final judgment, was not the subject of the present proceedings. In an obiter dictum, the Supreme Court nevertheless voiced its doubts as to the existence of such an obligation.
In the present case, the CAS had on its own initiative invited the parties to provide further information concerning their expenses, but had disregarded the parties' requests for the fixing of a short deadline. The CAS rendered its final judgment within a very short time, that is, not even one working day after its request for further information. In the view of the Supreme Court, the arbitral tribunal had thereby acted contrary to the principle of good faith. The parties had in fact filed their requests for the fixing of a deadline instantly upon receipt of the arbitral tribunal's request for further information and had set out their reasons for requesting a short deadline. They were therefore entitled to expect an answer to their requests before the final award was rendered. The Supreme Court also pointed out that the proceedings had been very short and intense and had not left the parties any time to list their expenses.
Comment
In this decision the Supreme Court implicitly held that an arbitral tribunal must act in accordance with the principle of good faith and found that the arbitral tribunal's actions had been contrary to this principle.
The Supreme Court mentioned that due to the short and intense proceedings the parties had not had time to prepare a statement of expenses and that not even a working day had elapsed between the arbitral tribunal's request and its final award. However, the result would have had to be the same even without these aggravating circumstances. If the arbitral tribunal requests the parties to undertake an action without allowing a reasonable time for them to comply, it seems that this would always be contrary to good faith.