EU General Court issues judgment in International Skating Union case

On 16 December 2020 the General Court of the European Union (the "Court") issued an important ruling in the International Skating Union ("ISU") case. While accepting that sports governing bodies may apply a prior authorisation system for third party events to ensure that all sports competitions meet common standards, the Court stressed that the applicable rules and procedures have to be fair, transparent and proportionate. However, the Court upheld the role of the Court of Arbitration for Sport ("CAS") as the primary body for the adjudication of sports-related disputes. 

Background

The ISU is the sports federation that regulates figure and speed skating at worldwide level and organises the main speed and figure skating international competitions. All professional skaters are subject to the rules of the ISU which include, in particular, pre-authorisation rules for third-party events as well as eligibility rules defining the conditions under which athletes may participate in the ISU competitions. Until recently, these rules prohibited athletes from participating in unauthorised skating events under pain of a lifetime ban from the ISU competitions.

Following a complaint by two Dutch athletes, the European Commission issued a decision in 2017, finding that the rules of the ISU infringed Article 101 TFEU and ordering the ISU to amend these rules. The Commission also took issue with the compulsory arbitration system of the ISU which gave exclusive jurisdiction to the CAS over actions against ineligibility decisions. The Commission found that the CAS failed to ensure effective judicial protection for athletes and reinforced the restrictions of competition arising from the ISU rules, especially insofar as the CAS, as well as its appeal body, the Swiss Federal Tribunal, have no obligation to apply EU competition rules. The ISU appealed the Commission decision before the Court.

Judgment of Court

In its judgment of 16 December 2020, the Court emphasised that the ISU, on account of its dual role as market regulator and operator, had a special responsibility to ensure undistorted competition on the market. While the ISU could legitimately enforce a pre-authorisation system to ensure that all skating events comply with common standards (e.g. related to the safety of athletes or the fairness of competitions), the applicable rules and procedures had to be "clearly defined, transparent, non-discriminatory, verifiable and capable of guaranteeing effective access to the market for competing event organisers". While the ISU rules did pursue certain legitimate objectives, the Court found that they were disproportionate to the extent that they:

• left the ISU "absolute discretion" to refuse to approve competing skating events;
• provided for manifestly disproportionate penalties (with athletes facing a lifetime ban from the ISU competitions), the application of which was, moreover, unpredictable; and
• imposed excessive and discriminatory requirements on third-party organisers, and also failed to set out specific time-limits for decisions on requests for authorisation.

Under these conditions, the Court concluded that the Commission did not err in finding that the ISU rules restricted competition "by object". 

However, the Court disagreed with the Commission with regard to the compulsory arbitration by the CAS. The Court observed that arbitration clauses are not anti-competitive in themselves, and do not render the infringement more harmful. On the contrary, there are clear benefits in having all sports-related disputes referred to a specialised court that is able to decide quickly and economically on such matters and ensures legal certainty and procedural uniformity for all athletes. Moreover, the Court found that the arbitration of the CAS did not violate the athletes' right to a fair hearing and did not compromise the effectiveness of EU competition law as athletes have the possibility to seize national courts and/or one of the competition authorities in the EU. Accordingly, the Court annulled the Commission decision insofar as it referred to the arbitration of the CAS as an aggravating circumstance.

Comment

This judgment provides important insights into the application of EU competition law to sports associations having both regulatory and commercial activities. The judgment firstly confirms that sports associations may lawfully enforce a pre-authorisation system for third-party events, provided that the latter pursues legitimate objectives and the applicable rules and procedures are fair, transparent, non-discriminatory and proportionate. ln this regard, the new authorisation rules of the ISU, which were developed in close consultation with the Commission, will probably serve as an important point of reference for other sports associations in the future. The Court also endorsed the role of the CAS as the primary body for the adjudication of sports-related disputes, thus preserving the established arbitration mechanism of many sports associations.

With thanks to Antoine Accarain of Ashurst for his contribution.