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Swiss Federal Tribunal Overturns Arbitration Award on Public Policy Grounds

On April 13, 2010, the Swiss Federal Tribunal issued its decision in Club Atlético de Madrid SAD v. Sport Lisboa E Benfica Futebol SAD, a dispute between two major European football clubs over compensation for a player who left his Portuguese club for a club in Madrid approximately three months into his contract. The courts decision annulled an arbitration award issued by the Court of Arbitration for Sport (CAS) in Lausanne, Switzerland on the grounds that the award violated procedural public policy under Article 190(2)(e) of the Private International Law Act (PILA). Specifically, the Swiss court found that the award violated the principle of res judicata, insofar as it disregarded an earlier decision issued by the Commercial Court of the Canton of Zurich on June 21, 2004. This decision is notable as it marks the first time since the PILA took effect in 1989 that a court has overturned an arbitration award on public policy grounds.

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