As if Schalke 04 did not have enough problems as it is this season, given their current standing in the Bundesliga, the club through no fault of their own could not play their first-round match in the German Cup. Schalke fell victim to a dispute between two Bavarian clubs, fourth-division side Schweinfurt 05, and newly promoted third-division club Türkgücü Munich. The Bavarian Football Association (Bayerischer Fussballverband, BFV) nominated Schweinfurt 05 for of the 2020/2021 Cup season. However, Türkgücü felt that they should have been nominated, and obtained an injunction in the Munich courts, which prevented the match between Schweinfurt 05 and Schalke 04 to be played as scheduled on 13 September 2020.
Please note that I have posted an UPDATE on 7 November 2020.
Both football fans and fans of the German Code of Civil Procedure (Zivilprozessordnung, ZPO) might find it interesting to take a closer look at the interplay of the legal proceedings that this triggered. On Tuesday this week, it was finally concluded that Schalke 04 will play Schweinfurt 05 as originally planned, but in getting there the District Court (Landgericht) Munich I, the Bavarian Supreme Court (Bayerisches Oberstes Landesgericht) and an arbitral tribunal issued decisions.
The dispute whether BFV had to nominate Schweinfurt 05 or Türkgücü to represent Bavaria in this year’s Cup has a COVID 19 background. Germany’s fourth tier football league is organized on a regional level, with five regional leagues, namely the North, Northeast, West, Southwest and Bavaria Regionalliga. BFV is the governing body for Regionalliga Bayern. The Bavarian regional league season did not come to a regular end, but was prematurely terminated due to COVID 19. BFV took, what it considered to be a solomonic decision: Following a rule change, BFV nominated Türkgücü Munich, who were the leaders of the Bavarian regional league at the time the season ended prematurely, to be promoted to the third division. On 6 September, runners-up Schweinfurt 05 were nominated for the Cup. In the past, BFV had always announced the Regionalliga champion.
Türkgücü applied for an interim injunction against both BFV and the German Football Association (DFB) to protect its alleged claim to be nominated in place of Schweinfurt 05. Just some 48 hours before the scheduled kick-off, on 11 September 2020, the District Court Munich issued an injunction in favour of Türkgücü and obliged the BFV to nominate the applicant Türkgücü for the Cup instead of Schweinfurt 05. The match on 13 September 2020 was subsequently cancelled.
Both BFV and DFB appealed against this injunction. Following an oral hearing, the District Court Munich amended its interim injunction and modified its reasoning: the court did not, as it had done originally, overturn BFV’s nomination. It did instruct BFV to revoke the nomination of FC Schweinfurt 05 and decide anew on the Cup nomination, taking into account the legal assessment of the court. In its press release, the court stated that BFV now had two options:
“Either BFV names Türkgücü on the basis of the league regulations dated 5 May 2020 or it changes the league regulations again at short notice. In doing so (…) the interests of all parties concerned must be taken into account and BFV must support the balance that it strikes by a reasoning. The nomination must then be made on this basis. The court instructed DFB to accept the revocation of [Schweinfurt’s] nomination and any new nomination by BFV.”
At the same time, BFV commenced arbitral proceedings against Türkgücü court, based on an arbitration agreement contained in the league admission contract between BFV and the club. In these proceedings, BFV thought to confirm the legality of its nomination decision. Türkgücü, for its part, applied to the Bavarian Supreme Court for a declaration that the arbitration proceedings were inadmissible (Sec. 1032 para. 2 ZPO). On 22 October 2020, the Bavarian Supreme Court dismissed that application and decided that the arbitration proceedings were admissible. In doing so, it relied on an interpretation of the specific arbitration agreement on the one hand and examined the general admissibility of an arbitration clause in the relationship between association and association on the other hand. In its press release, the Bavarian Supreme Court summarised its reasoning as follows:
“The arbitration agreement covers BFV’s application for a declaratory judgment pursued in the . Even if Türkgücü Munich no longer takes part in the games of the Bavarian Regional League and the dispute regarding the nomination in early September 2020 concerns the effects of the admission of Türkgücü Munich’s team to the third division in July 2020, the dispute falls within the scope of the arbitration agreement. It clearly stipulates that the arbitration agreement shall apply to disputes until the withdrawal from the Bavarian Regional League becomes legally effective. The dispute arose during the participation of Türkgücü Munich in the 2019/2020 Bavarian Regional League season. The 2019/2020 Regional League Regionalliga has not yet been brought to an end. Türkgücü Munich is still included the league table with 0 points and 0 goals. Türkgücü Munich has not been eliminated from the Bavarian Regional League with legal effect.
The arbitration agreement of the parties is also effective. In particular, it does not violate the prohibition of abuse under cartel law of Sec. 19 Act Against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen, GWB). BFV’s insistence on an arbitration agreement, stipulating the jurisdiction of a permanent arbitral tribunal is justified by objective factual reasons. Arbitral tribunals are able to bring disputes to a final decision speedily, even in the main proceedings, in order to provide legal certainty and legal clarity for the fast-moving sport of football. These advantages of sports jurisdiction are beneficial not only to the defendant but also to the claimants.”
As the way was thus “free” for the arbitral tribunal, the latter decided on 27 October 2020 that the BFV was acting lawfully when it nominated Schweinfurt 05.
Pursuant to Sec. 1033 ZPO, the District Court Munich was competent, irrespective of the jurisdiction of the arbitral tribunal for the main proceedings, to grant interim relief.
On its part, the arbitral tribunal was not legally required to await the Bavarian Supreme Court’s decision on Türkgücü’s application. According to Sec. 1032 para. 3 ZPO, such an application does not prevent the arbitral proceedings to continue and proceed to the making of an arbitral award. The fact that the tribunal issued the arbitral award shortly after the Bavarian Supreme Court’s decision indicates that the arbitral proceedings had been conducted in parallel. In any case, the arbitral tribunal was not bound by the legal opinion of the state court.
The friends of arbitration and sports law will look forward to the publication of the judgments, which are not yet available, the fans of Schweinfurt 05 and Schalke 04 will look forward the ball finally rolling on 3 November 2020. At the latest since a series of decisions that German speed skater Claudia Pechstein brought about in fighting her doping ban, the legality of “compulsory” arbitration clauses in agreements between individual athletes – as in the case of Pechstein – or clubs – as here in the Regionalliga agreement between Türkgücü and the BFV – on the one hand, and the sports associations, which regularly hold a monopoly position for their sport, on the other hand, is disputed (an overview is provided, for example by Dorothée Goertz on the Kluwer Arbitration Blog.)
However, even if the Cup match between Schalke 04 and Schweinfurt 05 will be played next week, this does not mean that the legal dispute has necessarily come to an end. The BFV’s press release states that the arbitration agreement rules out recourse to the ordinary courts. However, Türkgücü can of course apply to the Bavarian Supreme Court under Sections 1062, 1059 ZPO to set aside the arbitral award on the grounds that the enforcement of the arbitral award would lead to a result contrary to public order because the arbitration agreement violates cartel law.
Even if Türkgücü cannot any longer enforce its actual participation in this year’s Cup, as the arbitral award is equivalent to a final judgement until it is set aside by a state court according to Sec. 1055 ZPO, Türkgücü should be able to show it has standing to seek a declaratory judgement. The unsuccessful party would then have the right to seek legal review (Rechtsbeschwerde) by the Federal Supreme Court (Bundesgerichtshof). So watch this space.
Note on Landgericht (District Court) München I, judgent (Urteil) dated 30 September 2020, file no. 37 O 11770/20 and Bayerisches Oberstes Landesgericht (Bavarian Supreme Court), Order (Beschluss) dated 22 October 2020, file no. 101 SchH 129/20
The photo by Sandro Halank shows Nabil Bentaleb (FC Schalke 04) and Adam Jabiri (FC Schweinfurt 05) in the 2018/2019 Cup tie. Wikimedia Commons, CC BY-SA 3.0, 2018-08-17 1. FC Schweinfurt 05 vs. FC Schalke 04 (DFB-Pokal) by Sandro Halank–100, CC BY-SA 3.0