Posts Tagged ‘Due process’
Mass claims and the distinction between jurisdiction and admissibility (Part II)
With the release of the Dissenting Opinion in Abaclat v. Agentina, we now have the benefit of a forceful critique of the majority’s decision that the Abaclat Tribunal has jurisdiction to hear the claims of over 60,000 Italian investors against Argentina under the ICSID Convention and the Argentina-Italy BIT. Professor Georges Abi-Saab’s Dissenting Opinion (the Dissent) raises a number of objections to the majority’s decision. Most importantly, it states that the Tribunal “faces two glaringly insuperable obstacles that prevent it from taking jurisdiction”. First, the investors’ security entitlements are not protected investments, in particular, because the investments were not made, as required by the BIT, in the territory of Argentina. Second, an ad hoc ICSID tribunal does not have jurisdiction over collective mass claims under the ICSID Convention and the BIT, absent Argentina’s specific consent to the mass claims procedure. This post builds on the discussion in my previous post of the majority’s distinction between jurisdiction and admissibility in the context of mass claims. In contrast to the majority’s view that the number of claimants is a question of admissibility and not jurisdiction, in Professor Abi-Saab’s view, Argentina’s objection went to the scope of its consent to arbitrate and its consent to arbitrate could not be interpreted to include mass claims.
Drawing on US Supreme Court decisions on class arbitration, Professor Abi-Saab finds that there is such a fundamental difference between regular bilateral arbitration and mass proceedings that “special consent” is required for mass proceedings and that this consent cannot be deduced from a simple consent to arbitration. With respect to ICSID practice, he notes that cases of multi-party arbitration have either proceeded with the consent of the parties or without objection from the respondent. With respect to mass claims processes in international law, he notes that the practice has been to establish a specific process for the mass claims with the consent of the parties and that the only exception to this uniform practice is the United Nations Compensation Commission, which was established by the Security Council under its Chapter VII powers.
Professor Abi-Saab then turns to a subsidiary objection. Even if in principle Argentina’s consent to arbitration could be interpreted as consent to mass claims, he finds that the Tribunal does not have the power under the ICSID Convention and Arbitration Rules to adopt procedures for dealing with a mass claims proceeding. He takes issue with the majority’s distinction between a modification to the arbitration rules without party consent (which, according to the majority, a tribunal may not do) and adopting procedures to address the handling of mass claims (which, according to the majority, a tribunal is entitled to do). In Professor Abi-Saab’s view, the Tribunal has arrogated itself “the power to set aside, in large measure, the existing Rules of Procedure, and replacing them by another set of rules of its own; acting as a legislator, be it for one case.” (para. 208)
With respect to the concept of admissibility, Professor Abi-Saab appears to affirm that it has a role to play in international arbitration. He notes that “[g]enerically, the admissibility conditions relate to the claim, and whether it is ripe and capable of being examined judicially, as well as to the claimant, and whether he or she is legally empowered to bring the claim to court.” (para. 18), but goes on to state that “none of these conditions has anything to do with the determination of the scope of consent whether to the general or the special jurisdiction of tribunals”. He also notes that “regardless of the classification of the objection as a plea to jurisdiction or to admissibility, the result of the non-fulfilment of the requirements should have been the same, the dismissal of the case.” (para. 25). He thus takes issue with the approach of the majority, which he views as deciding questions of admissibility in its own discretion based on of its own subjective “balancing of interests” (para. 261).
Although the majority’s decision on consent is certainly controversial, it is sound in principle. Unlike an arbitration clause in a typical commercial contract, offers to arbitrate in investment treaties are open to the world of qualified investors. The offer to arbitrate is made to investors with investments. In principle, this offer to the world should be able to be accepted by a multitude of investors. If there is consent to arbitrate where one shareholder holds 100,000 shares, why is there not equally consent when there are 100,000 shareholders each holding one share?
Professor Abi-Saab is undoubtedly correct that the existence and scope of a Tribunal’s powers go to jurisdiction. For example, where an investment treaty provides that a tribunal’s remedial powers are limited to the granting of damages, it would be an excess of jurisdiction for the tribunal to order restitution of property or the specific performance of a contract. However, the Dissent is misguided in finding that the Tribunal exceeded its powers in adapting procedures for a mass claim arbitration. While it is true that the Abaclat proceedings might diverge from the usual ICSID proceedings, the ICSID Arbitration Rules provide a tribunal significant discretion in how proceedings are organized. While denouncing the majority’s decision as “replacing” (para. 219) the ICSID Arbitration Rules, the Dissent does not provide any specific examples of where the majority’s proposed adaptation to the proceedings would be contrary to the ICSID Arbitration Rules. In sum, the Dissent appears to equate what happens in the usual ICSID proceedings with what the ICSID Arbitration Rules require. For example, the ICSID Rules say very little about the mechanics for taking and considering evidence.
The Dissent expresses valid concerns with the procedures the Majority proposes for the simplification of the examination of claims and whether these procedures satisfy due process. Nevertheless, it is not possible to say ex ante that simplified procedures for the examination of evidence will necessarily breach the Respondent’s due process rights. The Majority states in conclusion that:
… the Tribunal remains obliged to examine all relevant aspects of the claims relating to Claimants’ rights under the BIT as well as to Respondent’s obligations thereunder subject to the Parties‘ submissions. Thus, it is the manner in which the Tribunal will conduct such examination which may diverge from usual ICSID proceedings (para. 533).
Due process is not ignored by diverging from “usual ICSID proceedings”. The form and mechanics of proceedings are, and should be, a function of the claims to be decided and the evidence to be assessed. As the Majority notes:
Notwithstanding the high number of Claimants involved, the Tribunal must examine not only the elements necessary to determine its jurisdiction (i.e., the nationality of the Claimants, their status of investor and the existence of their investment, etc.), but also those necessary to establish Claimants‘ claims and relating to the merits of the case (i.e., the existence of a breach by Argentina of its obligations under the BIT, the effect of such breach on Claimants‘ investment, etc.). Thus, the high number of Claimants may not serve as an excuse not to examine such elements and adaptations to the procedure may therefore not affect the object of the Tribunal‘s examination. (para. 529).
The task ahead for the Abaclat Tribunal is gargantuan. Examining all elements of the claims and ensuring that the Respondent is accorded due process will be extremely time consuming. Even if one may well wonder if an ad hoc Tribunal of three busy arbitrators is the best mechanism to address this kind of dispute, the majority was correct to find that it can hear a mass claim.
This post is written by Andrew Newcombe as a member of the ITA Academic Council.
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Mass Claims and the distinction between jurisdiction and admissibility
In its 4 August 2011 Decision on Jurisdiction and Admissibility, the majority of the Tribunal in Abaclat and Others (Case formerly known as Giovanna a Beccara and Others) v. Argentine Republic affirmed that it had jurisdiction to hear the claims of over 60,000 Italian investors against Argentina arising out of Argentina’s default on various sovereign bonds. The Decision is historic in its holding that there is no impediment to mass claims under the ICSID Convention and Arbitration Rules and that ICSID tribunals have the power under ICSID Arbitration Rule 19 to adopt procedures to handle mass claims.
Although the Tribunal’s finding that it can hear mass claim has garnered the most interest, various aspects of the Decision have sparked debate. The Tribunal held that the Claimants’ security entitlements in Argentinean bonds are investments for the purposes of Article 25, ICSID Convention and protected under the Argentina-Italy BIT. Another controversy arises from the fact that the Decision was issued by the majority of the Tribunal without the simultaneous release of the dissenting opinion. The dissenting opinion, which the Decision states is “Forthcoming”, has yet to be released.
On 15 September 2011, the Argentine Republic filed a request for the disqualification of the majority of the Tribunal (Professors Pierre Tercier (President) and Albert Jan van den Berg), alleging that the two arbitrators could not be relied on to exercise independent judgment. The disqualification request criticizes the two arbitrators in particularly strident language, arguing that the transmission of the Decision: “(a) without the dissenting opinion of the other arbitrator, (b) without his consent, and (c) without even waiting for a draft of said opinion” together with the majority’s rejection of Argentina’s request for provisional measures “is a manifestation of an absolutely inappropriate conduct” (para. 20).
Although the Decision raises a series of interesting issues (for example, see Sarah Ganz‘s post on the Decision’s treatment of the 18-month litigation requirement in the BIT), in this post I focus on the majority’s distinction between jurisdiction and admissibility, a subject of one of my previous posts. In its Decision, the majority of the Tribunal (the Tribunal) states that it is appropriate and necessary to distinguish issues relating to jurisdiction and admissibility (para. 248) and that the “guiding thought of the Tribunal for distinguishing issues of jurisdiction from issues of admissibility has been the following cornerstone consideration:
If there was only one Claimant, what would be the requirements for ICSID’s jurisdiction over its claim? If the issue raised relates to such requirements, it is a matter of jurisdiction. If the issue raised relates to another aspect of the proceedings, which would not apply if there was just one Claimant, then it must be considered a matter of admissibility and not of jurisdiction.” (para. 249)
The Tribunal’s analysis thus takes a two-fold approach. First, it analyzes the mass claims issue within the context of the Parties’ consent to arbitration (a question of jurisdiction) and second, it analyzes the admissibility of mass claims.
The Decision is perhaps the clearest example of an investment treaty tribunal distinguishing between jurisdiction and admissibility. The Tribunal highlights at para. 247 that:
(i) While a lack of jurisdiction stricto sensu means that the claim cannot at all be brought in front of the body called upon, a lack of admissibility means that the claim was neither fit nor mature for judicial treatment;
(ii) Whereby a decision refusing a case based on a lack of arbitral jurisdiction is usually subject to review by another body, a decision refusing a case based on a lack of admissibility can usually not be subject to review by another body;
(iii) Whereby a final refusal based on a lack of jurisdiction will prevent the parties from successfully re-submitting the same claim to the same body, a refusal based on admissibility will, in principle, not prevent the claimant from resubmitting its claim, provided it cures the previous flaw causing the inadmissibility.
With respect to consent, the Tribunal rightly held that if, in principle, it had jurisdiction over one claimant, “it is difficult to conceive why and how the Tribunal could loose such jurisdiction where the number of Claimants outgrows a certain threshold.” Further, it highlighted that “the collective nature of the present proceeding derives primarily from the nature of the investment made.”:
The ICSID Convention aims at promoting and protecting investments, without however further defining the concept of investment and leaving this task to the parties through relevant instruments such as BITs … Thus, where the BIT covers investments, such as bonds, which are susceptible of involving in the context of the same investment a high number of investors, and where such investments require a collective relief in order to provide effective protection to such investment, it would be contrary to the purpose of the BIT and to the spirit of ICSID, to require in addition to the consent to ICSID arbitration in general, a supplementary express consent to the form of such arbitration. In such cases, consent to ICSID arbitration must be considered to cover the form of arbitration necessary to give efficient protection and remedy to the investors and their investments, including arbitration in the form of collective proceedings. (para. 490).
In conclusion, the Tribunal, rightly held that “the “mass” aspect of proceedings relates to the modalities and implementation of the ICSID proceedings and not to the question whether Respondent consented to ICSID arbitration. Therefore, it relates to the question of admissibility and not to the question of jurisdiction.” (para. 492).
The Tribunal took a purposive approach to the interpretation of the ICSID Convention’s “silence” as to mass claims, holding that it would be “contrary to the purpose of the BIT and to the spirit of ICSID to interpret this silence as a “qualified silence” categorically prohibiting collective proceedings, just because it was not mentioned in the ICSID Convention” (para. 519).
With respect to the adaptations, the Tribunal identified the need to adopt mechanisms to allow a simplified verification of evidentiary materials with respect to each individual claim (para 531) and the manner of the representation of the claimants (paras. 531-532). In finding that it had the power to adapt procedures to address the “mass claims” aspect of the case, the Tribunal states that adaptations must consider the principle of due process and a must seek a balance between the procedural rights and interests of each party (para. 519). In assessing that balance the Tribunal considered: (i) under what conditions is it acceptable to change the method of examination from individual to group treatment; (ii) to what extent are Argentina‘s defense rights affected in comparison to 60,000 separate proceedings; and (iii) is it admissible to deprive Claimants of certain procedural rights (para. 539).
Argentina’s had argued that there are strong policy reasons why ICSID is an inappropriate forum to address issues with respect to sovereign debt restructuring. The Tribunal flatly rejected this argument, rightly stating that “Policy reasons are for States to take into account when negotiating BITs and consenting to ICSID jurisdiction in general, not for the Tribunal to take into account in order to repair an inappropriately negotiated or drafted BIT.”
It its disqualification request, Argentina suggests that the procedural mechanisms set out in the Decision are an unjustifiable limit on Argentina’s right of defence and further evidence of the Tribunal’s alleged lack of independent and impartial judgment (paras. 25 et seq.). Although Argentina has characterized the majority’s Decision as “egregious” and various Tribunal statements as “shocking” and “absurd”, this hyperbole should seen for what is—a regrettable attempt to appeal a tribunal decision through the guise of a disqualification request. The majority of the Tribunal’s approach to mass claims is correct in principle and practical, objective and fair-minded in practice. International arbitration can be an effective and efficient system of dispute resolution because of its ability to adopt flexible procedures to address myriad claims and issues. The majority’s Decision reflects this approach and will stand the test of time.
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The New ICC Rules: Continuing Evolution of Case Management Powers to Control Costs and Delays in International Arbitration
The escalation of costs and delays in international arbitration and the consequent dissatisfaction of the system’s users have become prime subjects for users of and commentators on international arbitration.1 An informal study by the Corporate Counsel International Arbitration Group (CCIAG) in 2010 found that every single corporate counsel who was surveyed thought that arbitration ‘takes too long’ and ‘costs too much’.2
It has also been correctly stated that “[w]hether or not concerns about international arbitral efficiency are exaggerated, the international arbitration community must face this discontent and, more importantly, take steps to maintain its legitimacy with its users.”3
The problems of cost and delay in high value disputes are not, however, new subjects. In 1989 Lord Mustill posed the following (largely rhetorical) questions with respect to high value commercial arbitrations:
Do the parties work together to achieve a result which is fair and sensible in commercial terms, or do they not rather seek out every procedural advantage to ensure that they win, regardless of the merits? Do the parties really want a speedy decision, or will not the defendant spin out the arbitration for as long as possible? Are the proceedings any longer imbued by informality, or do they not have all the elephantine laboriousness of an action in court, without the saving grace of the exasperated judge’s power to bang together the heads of recalcitrant parties4
Building on the foundations laid in the 1985 UNCITRAL Model Law,5 the major sets of arbitral rules have gradually evolved over the last 20 years to clarify: (i) the extent to which parties are obliged to conduct arbitrations in a timely and cost efficient manner; and (ii) the circumstances in which arbitral tribunals may in fact be empowered to bang parties’ heads together.6
The most recent step in that evolution was the publication of the revised ICC Rules on September 12, 2011, which come into effect from January 2012.
Article 22(1) of the new ICC Rules states:
The arbitral tribunal and the parties shall make every effort to conduct the arbitration in an expeditious and cost-effective manner, having regard to the complexity and value of the dispute.
Article 22(1) thus contains an explicit contractual obligation on the parties to conduct their arbitration in a ‘proportionate’ manner. More often than not, however, when large sums of money are at stake and experienced counsel are engaged on both sides, at least one of the parties has a rational incentive to ‘intensively litigate’ the dispute, thus increasing costs and causing delays.
Once a dispute has arisen, it is unrealistic to expect either party to act contrary to its self-interest in pursuit of the ‘higher ideal’ of arbitral efficiency. In such situations, time and costs are best kept in check by empowering tribunals to take ‘proportionality’-based case management decisions. The existence of such a power is common to most modern sets of rules, and is contained in Article 22(2) of the new ICC Rules:
In order to ensure effective case management, the arbitral tribunal, after consulting the parties, may adopt such procedural measures as it considers appropriate, provided that they are not contrary to any agreement of the parties.
The innovation with regard to case management in the new Rules is Article 24, which makes it mandatory for the tribunal to convene an initial “case management conference to consult the parties on procedural measures” which may be held “in person, by video conference, telephone or similar means of communication”. Article 24 also suggests that the tribunal may adopt one or more of the case management techniques described in Appendix IV.
Appendix IV contains a useful summary of case management techniques (such as bifurcation, limiting document requests, and limiting the length and scope of written submissions and witness evidence). It also emphasizes that “[a]ppropriate control of time and cost is important in all cases. In cases of low complexity and low value, it is particularly important to ensure that time and costs are proportionate to what is at stake in the dispute.”
While the case management techniques set out in Appendix IV will be familiar to all experienced arbitration practitioners, the ‘codification’ fulfils at least two important functions. First, it can reasonably be expected that the explicit encouragement to use such techniques will increase their use by less experienced arbitrators. Second, the explicit enunciation of case management techniques serves further to legitimize their use and hence to insulate awards from challenge on due process grounds.
One member of the CCIAG has suggested that “[t]o fix arbitration, practitioners must return the process to its original state as a streamlined option for dispute resolution.”7 In practice, it is likely impossible to reverse the trend by which arbitration has absorbed certain features of litigation, but it remains realistic to hope that tribunals (which, unlike the national court judge, will see through a case from beginning to end) will use their case management powers to ensure that the procedure is as streamlined a possible.
Paul Friedland and Paul Brumpton, White & Case LLP
- See, for example, Jean-Claude Najar, ‘Inside Out: A User’s Perspective on Challenges in International Arbitration’, Arbitration International, 25 (2009) 515, 517. ↩
- Lucy Reed, ‘More on Corporate Criticism of International Arbitration’, Kluwer Arbitration Blog, 16 July 2010 (http://kluwerarbitrationblog.com/blog/2010/07/16/more-on-corporate-criticism-of-international-arbitration/) “A recent study of the Corporate Counsel International Arbitration Group (CCIAG) found that 100% of the corporate counsel participants believe that international arbitration “takes too long” (with 56% of those surveyed strongly agreeing) and “costs too much” (with 69% strongly agreeing).” ↩
- Ibid. ↩
- Lord Mustill, ‘Arbitration: History and Background’, Journal of International Arbitration 6(2) (1989) 43, 54-55. ↩
- Article 19 of the Model Law states that, in the absence of agreement between the parties, “the arbitral tribunal may, subject to the provisions of this Law, conduct the arbitration in such manner as it considers appropriate. The power conferred upon the arbitral tribunal includes the power to determine the admissibility, relevance, materiality and weight of any evidence.” ↩
- See, for example, Article 14 of the LCIA Rules (1998), Article 16 of the AAA ICDR Rules (2009) and Article 17 of the UNCITRAL Rules (2010). ↩
- Jean-Claude Najar, ‘Inside Out: A User’s Perspective on Challenges in International Arbitration’, Arbitration International, 25 (2009) 515, 517. ↩
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Sports Arbitration and Due Process: The Sequel
by Laurence Burger
In a post dated March 2, 2011, I reported about a Swiss Supreme Court decision of February 20, 2009 where the Supreme Court had confirmed a CAS award which deemed an appeal withdrawn after the appellant had failed to pay the advance on costs.
I indicated that I did not know what had happened to the dispute afterwards.
As it turns out, about a month after this post, the saga continued with the Supreme Court rendering another decision related to this matter.
As a reminder, the dispute concerned the payment of an indemnity by a football coach to its former club following a transfer. The identity of the parties being revealed in this new decision, I will refer to the parties by their names. The name of the coach is Luis Fernandez; the name of the former club, Al-Rayyan Sports Club, in Qatar.
Shortly after the first decision of the Supreme Court, Al-Rayyan requested the FIFA to open disciplinary proceedings against Mr Fernandez for failure to pay the indemnity. The FIFA opened disciplinary proceedings and ordered the coach to pay the indemnity within 60 days. Passed this deadline, Mr Fernandez would be automatically suspended of any football-related activity upon request by the club. Mr Fernandez appealed this decision with the CAS, requesting however that the execution of the FIFA decision be suspended and that no decision be rendered before the criminal complaint that he was about to bring be instructed. Mr Fernandez filed shortly thereafter a criminal complaint against the president of the Beitar Jerusalem FC, the club that newly employed him, accusing him of fraud and false pretenses.
The CAS suspended the execution of the FIFA decision. However, it did not take into account Mr Fernandez’s request to wait until the outcome of the criminal proceedings and confirmed the FIFA’s disciplinary measure. It appears that thereafter, Mr Fernandez having not paid the indemnity, he was suspended from its football activities by the FIFA.
Mr Fernandez appealed the CAS decision before the Swiss Supreme Court. The first question that the Supreme Court had to consider was whether Mr Fernandez still had standing. Indeed, Mr Fernandez had paid the indemnity, albeit late, and as a result the FIFA had terminated his suspension. As a result, the Court had to consider whether Mr Fernandez still had a legally protected interest to see the CAS award overturned. The Supreme Court held that Mr Fernandez had standing, but dismissed the appeal on substantive grounds.
Clearly, the Supreme Court wanted to give Mr Fernandez his day in court, after what had happened in the first proceeding. The reasoning of the Supreme Court to grant standing to Mr Fernandez is however hard to follow. The Supreme Court held that the FIFA should not have rendered its decision before the outcome of the criminal proceedings was known, because the criminal proceedings could have revealed that the Al-Rayyan club had been paid twice, in which case Mr Fernandez could introduce a liability claim against the FIFA claiming that, had the FIFA not ordered him to pay the indemnity, he would not have unduly paid twice. I believe that the Court made a mistake in referring to the FIFA in this instance: the procedure was in the hands of the CAS, it is the CAS that should have stopped the procedure until the decision of the criminal court. Indeed, the Court then holds that the TAS’ errors grant standing to Mr Fernandez. On the whole, however, the reasoning of the Supreme Court is correct, in my opinion: the CAS should have waited until the outcome of the criminal complaint to render its decision. The criminal procedure would have determined whether Mr Fernandez was or not victim of a fraud, and presumably whether he had actually paid the indemnity twice.
I do not know the inside story behind this case, and in particular not what the criminal proceedings will reveal, but I find both cases highly unsatisfactory from a legal efficiency point of view. To the outside (legal) eye, it seems that the system, whether at the hand of the tribunals or of Mr Fernandez’s representative, has twice failed him.
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Sports Arbitration and Due Process
by Laurence Burger
Sports arbitration is becoming an increasingly important field. In Switzerland, where the Court for Arbitration for Sports is located, the Swiss Supreme Court is seeing lately nearly half of its cases coming from the CAS.
Sports arbitration, however, gives rise to a specific concern with respect to the issue of consent. Often, athletes find themselves before arbitral tribunals whose jurisdiction was not directly chosen by them, but to which they are attracted for the sole reason that they signed an agreement with a federation which submits its disputes to arbitration. Courts, and in particular the Swiss Supreme Court, have seldom held arbitration agreements by reference in the sport context to be contrary to due process. The stated reason, to which the author adheres, is that arbitration representing the functional equivalent of judicial process, an athlete cannot be deemed to enter into an engagement violating its personality rights (and in particular Article 27 of the Swiss Civil Code) when entering into an arbitration agreement. Moreover, the recourse to arbitration is often in the best interest of the federations, by ensuring an harmonious case law, and of the athletes, by ensuring in particular a speedy resolution of their disputes.
Nevertheless, the situation changes when, as a result of the entering into an arbitration agreement by reference, a party looses his right to see his matter decided by a judge.
A 2009 decision of the Swiss Supreme Court raises this specific issue.
In a decision 4A_600/2008 dated February 20, 2009, the Supreme Court had to consider a challenge of a decision of the CAS which deemed an appeal withdrawn after the appellant failed to pay the advance on costs.
The facts of the matter arise out of a claim filed with the International Football Federation by a football club against the club’s former coach, whereby the club claimed EURO 400,000 to the coach for early termination of the employment agreement. The coach, alleging that the sum had already been paid, concluded that the claim be dismissed.
The Commission of the Player’s Status considered that proof of payment had not been brought with satisfaction and condemned the defendant to pay the amount plus interests.
The defendant appealed this decision before the CAS. The CAS acknowledged receipt of the appeal and brought the attention of the parties to the fact that they would have to pay an advance of costs. About a month later, the CAS informed both parties that the advance on costs had been set at CHF 19,000 each, and asked to be paid this amount by 15 September 2008. While the appellant paid this amount within the deadline, the appellee did not. On September 25, 2008, the CAS set the appellant another deadline until October 10, 2008 to pay the advance on costs. The letter of CAS reminded the appellant that “in the absence of payment within the said time limit, the appeal will be deemed withdrawn”.
On October 15, 2008, the CAS reminded the appellant that the deadline had passed and asked him to provide evidence of payment of the advance on costs. Counsel for appellant replied that the advance on costs would be paid shortly.
On 12 November 2008, the advance on costs having not been paid, the CAS send a fax to the parties informing them that the appeal was deemed withdrawn and that a closing order would be sent shortly.
On 13 November 2008, appellant’s counsel sent a confirmation of payment to the CAS and asked to be informed of the continuation of the proceedings. Attached to this correspondence was a letter dated 12 November 2008 of the appellant requesting his bank to wire CHF 19,000 on the CAS’ account.
By order of 18 November 2008, the President of the CAS Appellate Chamber [verify terminology] declared the proceedings closed. On 20 November 2008, the CAS received a notice of credit informing it that the appellant had paid CHF 19,000 on its account.
The CAS order of 18 November 2008 was challenged before the Supreme Court. The CAS took position to dismiss the challenge on the ground that the order was not an award. The Supreme Court admitted the challenge but rejected it on the merits.
One of the grounds raised by the appellant was the fact that the CAS had been excessively formalistic in holding the appeal as withdrawn although the advance on costs had been received, albeit late. Because of the CAS dismissal, the appellant was loosing any chance not to pay EURO 400,000 a second time. The Supreme Court dismissed however this argument, holding that it was not excessively formalistic for the CAS to withdraw the appeal when it was conditioned upon the payment of an advance on costs and when the appellant had been duly informed of the amount of the advance and of the deadline for payment.
Although this decision did not receive much attention, it raises difficult issues of due process which go beyond the sole issue of consent. Here, the defendant lost an opportunity to have his case heard by the CAS. The CAS, in this case, would have been the first instance external to the FIFA and thus truly independent.
I do not know what happened to the dispute afterwards, and in particular if the defendant tried to bring the matter before a state court, and more importantly whether a state court would have heard an issue already decided by the FIFA.
In light of the circumstances of the case, and in particular of the CAS’ numerous attempts to see the advance of costs paid, I do not believe that it can be blamed for the outcome of the case, in particular in light of the negligence displayed by counsel for the defendant.
But the matter remains unsettling, particularly if the defendant consented to arbitration by reference. In this case, not only did the defendant not choose to bring the matter to arbitration, but also, because of this imposed dispute resolution mechanism, ended up without the possibility to have his dispute reviewed by a court of independent jurisdiction. This result seems to be pushing the limits of the constitutionally guaranteed right to an access to a judge.
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