Swiss Supreme Court International Arbitration Decision of 08 March 2016
Domestic public policy v. international public policy
Dear Friends,
Please find herewith the English translation of an opinion dated March 8, 2016, which was published on the website of the Court a few weeks ago. The opinion is of limited interest.
The case involved a dispute between two professional football clubs, which entered into a contract in 2010 concerning a certain professional player. As is fairly usual, the transfer of the player by one club to the other was accompanied by certain commitments in case of a subsequent transfer. A contractual penalty could apply in various circumstances.
When the player was loaned to another club, a dispute ensued and on December 10, 2013, the Single Judge of the FIFA Players’ Status Committee rejected the claim filed in this respect. The other club appealed to the CAS and the Panel (Chairman Francisco de Cossio with arbitrators Gustavo Abreu and Romano Subiotto) reversed the decision of the Single Judge and awarded damages in the amount of USD 1’500’000.
An appeal was made to the Federal Tribunal and Section 6 of the opinion is of some interest because the Court addressed the impact of a provision of Swiss law (Art. 163 of the Swiss Code of Obligations), by which Courts have to review the appropriateness and the amount of penalty clauses, even in the absence of any argument raised by the party against which the clause is invoked. It is admitted that the provision is mandatory and falls within Swiss public policy. The Court reiterated its definition of substantive public policy in international matters and stated once again that a mandatory provision that is part and parcel of substantive public policy in domestic law does not necessarily qualify as public policy from an international perspective.
The decision does not come as a surprise, but the reiteration of the previously-expressed view is certainly welcome, as there are all sorts of ‘public policy’ provisions of domestic law that could otherwise be invoked in international arbitrations seated in Switzerland.
As usual, feel free to use the translation as much as you wish. Others can be downloaded from our website at www.swissarbitrationdecisions.com, which now includes a facility to register in order to receive the latest translations. Of course, those of you who receive this message need not register as you are already on the list.
Best regards
Charles PONCET
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