Swiss association law
Switzerland counts hundreds of thousands of associations in all venues of life. These corporations range from very small local entities, typically the small club dedicated to its members’ cultural or leisure activities, to very big bodies, e.g., the national unions, the Swiss Touring Club and the national, continental and international sports governing bodies. From the point of view of the constituencies, small associations are usually set up by individuals and comprise only or essentially individuals as members. Bigger associations, on the other hand, are generally set up by other associations or other legal entities as an umbrella structure; their members tend to be legal entities, but they can also admit individuals as members. For the purpose of this article, this second type of the association will be called federation—derived from the French title for associations of associations, i.e., federations. Associations and federationsFootnote 3 subject to Swiss law are governed by Articles 60–79 of the Swiss Civil Code (SCC).Footnote 4 The main characteristics of Swiss association law as described below were laid down at the beginning of the last century and have remained untouched by subsequent amendments of the SCC.
As per Art. 60 SCC, the creation of an association or federation as legally valid entities independent of their members is subject to few requirements by law: the assembly of founding members has to set out in writing that it intends to create a corporation under the form of an association, the overall purpose of the association and its (expected) resources, e.g., membership fees, donations, revenue from sponsoring (Art. 60 I SCC). The overall purpose of any association must be “non-commercial” (the original legal text read: pas un but economic, nicht wirtschaftliche Aufgaben, fine non economico), which amounts to “non-profit” in the legal language of other countries. However, commercial activities—as opposed to a commercial purpose—of the association do not infringe Art. 60 SCC and therefore do not invalidate the association if they are conducted in order to provide the means to achieve the overall non-profit purpose of the association.
Beyond having to fulfill these basic requirements, associations are very free to set their own rules as to their structure and the functioning of the internal bodies, the rights and obligations of their members and the settlement of internal conflicts. The 20 short articles of Swiss law on associations provide a minimal organizational framework, lay down the basic rights and duties of the members and to settle a few specific questions, in particular concerning bookkeeping standards, auditing and the liability for debts of the association. With a few more statutory rules added, the resulting regulatory regime is generally sufficient for small clubs, established and run by a group of people pursuing common cultural, recreational, charitable and other activities at a local level.
Of higher relevance for the sports world and in particular for the international governing bodies of sports is the possibility for bigger entities to create a more sophisticated framework, with complex rules as to the organization of the association and to the rights and obligations of its members. This possibility exists since the SCC was passed in 1907 and enacted in 1912 and was certainly intended by the lawmaker, aware of the fact that already in the beginning of the twentieth century, national associations with hundreds, some with thousands of members existed—interestingly one of them being the Swiss Alpine Club with 6000 members.Footnote 5
Taking advantage of this freedom, associations must nevertheless spell out the most important rules as to the basic organization of the entity, the powers of its organs and sub-divisions, the essential rights and duties of members, as well references to the rules of other legal persons, if these rules result in important obligations for the members, in the statutes. The statutes can be and generally are completed by the provisions of the bye-laws and by references to (further) rules of other entities, e.g., the rules of WADA or CAS. Reference to the rules of the sports governing bodies is usual also in contracts concluded by sports associations and federation, notably in work contracts of professional athletes or support personnel, and in contracts with event organizers, suppliers, sponsors, etc. Incorporation of these rules results in their being binding on members and the contractual parties. Statutes determine the conditions at which the statutory provisions and bye-laws can be changed; for changes of the statutes a majority vote—of at least 2/3 of the votes in most associations—of the Members’ Assembly is usually required.
As fully fledged legal persons, associations are also empowered to own or participate in other legal entities (foundations, commercial companies, associations) and to enter into contractual relationships with third parties.
The rules set up by associations and federations are not subject to any preliminary control. As provided by Art. 61 SCC, associations conducting commercial business must register with the Commercial Register, but they already exist as valid legal entities as of the day they fulfill the requirements of Art. 60 SCC as described above. All other associations can, but do not have to, register. In the case of an application for registration, the Office of the Commercial Register conducts a limited review of the statutes to ensure that the necessary components of the statutes exist. The same is true for later modifications of the statutes and bye-laws. In other words, the legality of associations’ rules is only fully controlled in the cases where a decision of an association or a dispute between parties involving the rules of an association is challenged in court. Art. 75 SCC, which cannot be overridden by the association’s own rules, grants members the right to submit decisions of the association’s bodies to an independent and impartial judicial authority.
As will be discussed in detail below under Sect. 2.3, when reviewing such cases, the autonomy of the association will (still) be a major factor for the outcome of the case. As commanded by Art. 63 SCC, the court will base its decision primarily on the provisions of the association pertaining to its relationship with its members, unless mandatory law provides for different rules. The mandatory provisions of Swiss association law, in particular Art. 75 SCC, are aimed at protecting the underlying principle of this legislation, i.e., the democratic spirit of associations which implies some fundamental rights of members. But there are very few mandatory provisions of law which limit the powers of the associations. Art. 63 SCC spells out perfectly that the intention of the legislator was to grant associations large powers of self-regulation.
However, it goes without saying that the rules of an association can only govern its own (internal) affairs and those with third parties who have agreed to submit to the rules of the association. General law cannot be excluded for criminal acts, torts, social security or for dealings with state authorities in general (tax, administrative law, immigration law, etc.).Footnote 6
The international sports governing bodies in Switzerland
Most of the international sports governing bodies are domiciled in Switzerland and set up as associations, subject to Art. 60 ff SCC. Among them, the best known are the International Olympic Committee (IOC) and its dependent associations and federations, the international federations (IFs) of the popular sports like football, basketball, swimming and skiing, as well as the powerful Union of European Football (UEFA). The possibility to create adequate, legally enforceable regulations within a very liberal legal framework was probably one of the determining factors in deciding to choose Switzerland as their seats.
The Olympic organizations and the IFs took full advantage of the large autonomy granted to them under Swiss association law. Over the years and in virtually all sports, rules on the organization of the federations and their subordinate bodies, as well as the rules of their respective game and the rules pertaining to competitions have grown tremendously into elaborate and intricate regulations. They contain statutes of at least dozens of pages and multiple and voluminous bye-laws, completed usually by references to the rules of the World Anti-Doping Agency (WADA; see last paragraph of this section) and by rules on conflict settlement, mostly through arbitral tribunals (see Sect. 3 below). By these means, a tightly woven network of rules is applicable from the top to the bottom of the pyramid of the sports organizations and, of course, to the athletes. This is necessary for the rules to be applied validly throughout the sporting world and therefore of major importance for the functioning of international sports.Footnote 7
The compliance of international governing bodies in sports with the—very limited—formal legal requirements concerning the statutes was naturally never a problem. However, questions were raised whether the international sports governing bodies meet the substantive condition of the non-profit purpose. This is a prerequisite for becoming a valid association or federation as explained in Sect. 2.1. The answer in Swiss legal scholarship has always been positive on the following grounds: The sports governing bodies’ first and utmost aim is to provide the regulations for their sport, organize or support the organization of competitions and promote their sport or even sport in general. These are objectives of non-commercial nature and imply a non-profit purpose.Footnote 8 Undeniably, the international sports governing bodies—as well as the lower federations and associations of the pyramid of organized sports, including clubs—nevertheless dispose of sometimes considerable resources derived from commercial activities, conducted directly or via their subsidiaries or associated commercial and non-commercial entities. But, in contrast to commercial companies, the means at the disposal of the international sports federations are then redistributed without taking into account the financial input of the continental or national federations; in the same vein, subsidies, financial and other support go mostly to financially weak and small countries which generally have contributed neither to the financial resources nor to the activities of superior bodies. The final aim of the international sports governing bodies, just like the one of the small club, is therefore generally still qualified as ideal and the validity of these associations and federations confirmed.
Questions have also been raised in legal literature as to the suitability of the association for entities of the size of the international and big internal sports organizations with important business activities. The original association law of the SCC was not tailored for these entities despite of the existence of some big associations already around the turn of the nineteenth to the twentieth century (see above Sect. 2). Rather than linking the validity of entities as associations to the volume of business conducted, the lawmakers introduced stricter requirements concerning the registration, bookkeeping and audits of very big associations (Art. 61, 69a ff SCC) in 2008. Not many of the sports governing bodies reach the thresholds which would subject them to these rules, but many federations apparently comply voluntarily.Footnote 9
The international sports governing bodies’ network also includes arbitral instances, destined to deal with litigation between the actors of the sporting world, in particular the Court of Arbitration for Sports (CAS), placed under the supervision of ICAS (see below Sect. 3.1), as well as the World Anti-Doping agency (WADA).Footnote 10 WADA was created as a Swiss foundation, but is now headquartered in Montreal, Canada, with a subsidiary in Lausanne, Switzerland. It issues the World Anti-doping Code (WADA-C) which contains rules on doping, including prohibited substances and sanctions, and is generally referred to in the regulations of the IFs, the IOC and its affiliated agencies, as well as event organizers.
Litigation of the sporting world before arbitration, in Switzerland and abroad
Until the late 1990s, before arbitration became the almost exclusive method of conflict settlement in sports, disputes were decided by the ordinary courts in Switzerland or abroad.Footnote 11 The Swiss rulings in this field are generally founded on Art. 75 SCC, discussed below, and reflect the high value afforded to the autonomy of associations by the Swiss lawmaker: judges review decisions of associations with reserve (“avec retenue”—“‘mit Zurückhaltung”), sometimes even favorably (“mit Wohlwollen”) for the association involved, and uphold them except in cases of (clear) violations of mandatory legal rules and of the statutory provisions of associations.Footnote 12 This attitude appeared to be justified and still does to a certain extent, by the underlying concept of the non-economic aim of associations, as well as the usually small size and reduced volume of commercial dealings of associations.
But Swiss courts took a further step in order to protect the autonomy of sports associations. It denies jurisdiction altogether where the disputed decision of an association concerns what came to be called the Rules of the Game (Spielregeln, règles de jeu).Footnote 13 Underlying this approach to disputes in sports is the vision of sports as being purely a leisure activity, with no legally protected interests at stake. Applying the Rule of the Game theory meant, at least in the early years before the mid-1970s, the exclusion from judicial review of most disputes of the sports world, since the Rules of the Game, as the Swiss courts understood them then, comprised all rules of the sports organizations concerning the practice of sports, e.g., regulations on qualification for competition, on licensing, on transfers and on decisions, including sanctions, during matches or games and beyond. Only a very small part of the disputes between sports associations or federations and their members—typically in relation with the organization and the participation in different bodies of the association, membership fees and the like—was accepted for review by courts, as they would have been coming for any kind of association since, in the view of the courts this category of decisions concerns the application of the Rules of Law (Rechtsregeln, règles de droits).
Courts were comforted in this approach in particular by the considerations of one scholar published in 1973.Footnote 14 Thus, sports organizations enjoyed unlimited freedom in issuing and applying a considerable portion of their rules for many years. A similar perception of sports could also be observed in other countries. In reminiscence of the situation in the early twentieth century, when sports were the pastime of the wealthy and the poorer stratas of society had neither the means nor the time for such activities, a similar reluctance to deal with litigation of the sports world was noticeable abroad too, especially in the UK.
The Swiss courts’ approach to disputes within sports associations violates one of the key provisions of Swiss association law, Art. 75 SCC. This mandatory article of law guarantees all members of associations due process by an independent and impartial judge in litigation about the association’s decisions which infringe on the rules of the association and mandatory State law.Footnote 15 Art. 75 SCC does not limit the review of cases on the basis of the sector of activity. It was difficult from the start to see any argument in favor of this violation of mandatory law …. by courts. The restraint with which courts evaluate disputed decisions of associations, as explained above, suffices to leave associations a large space for self-regulation and decisions of sports associations challenged in courts may well be upheld depending on the concrete situation. The legitimate interests of sports associations are thus duly taken into consideration, as they are for other types of associations, without leaving the weaker parties in disputes, generally the athletes and small clubs, altogether without the legal protection due.
As of the 1970s, due to the increase in international competitions, the professionalization of top level sports and the involvement of commercial interests, more people and institutions were concerned by the application of the regulations of sports organizations, in particular of those issued by the international governing bodies. Logically, contention within the sporting world grew too. The difference to earlier days was furthermore that in many cases existential issues were at stake for athletes and clubs, the bottom layers of the pyramid of organized sports. Still, it took a while and some external decisions by State courts and the EU instances for the sports governing bodies to adapt their attitudes and regulations to the new situation.
Three key cases before Swiss courts illustrate the problems inherent in the international regulations before these adaptations. Early on, at the beginning of the 1970s, Perroud, a semi-professional football player had to go to court in order to be able to carry on working in sports. He had been prevented from playing for another club after his contract with his previous employer had ended, because the two clubs could not agree on the transfer fee. Regulations allowed the clubs to block an athlete from employment for this reason and courts had to put an end to these rules.Footnote 16 During the 1980s, Sandra Gasser,Footnote 17 a sprinter, was suspended for doping without having been informed of the procedure pending against her and without being allowed to participate. No procedural rules in the applicable regulations protected the rights of the weaker party in internal litigation, to the point that she was not even informed of the outcome of the procedure other than by a telephone call from her club’s president. This was the first case where courts insisted on protecting the procedural rights of weaker parties. The SFT “Flaschenwurf” ruling of 1982 raised the question whether sanctions pronounced by the Swiss Football League against two clubs for incidents during a match could be challenged in court. The answer was positive as to the effects of the sanctions which went beyond the match.Footnote 18
As said above, the situation was similar in other countries and raised the same questions for courts and authorities. Some 20 years after the Perroud case, the footballer Bosman submitted a comparable request to the European Court of Justice. He fought for his right to exercise his profession and to see general rules on the free movement of workers applied to his situation, which he was denied by the sports bodies. It is well known that he too won.Footnote 19
The rules applied in these and many other cases were obviously of existential importance for the athletes and clubs. With the heightened publicity of sports events and, consequently, of the decisions of sporting bodies, in particular in matters of transfers of players and of sanctions, the importance of these decisions for the reputation and future careers of the individuals concerned increased. The general exclusion from judicial review of a substantial part of the decisions by sports associations and federations without at least a summary evaluation of the concrete situation and the rights of the parties at stake and possibly violated, became increasingly untenable. Progressively, courts changed their approach, both in cases of professional and amateur sports, and granted judicial review in matters previously considered as “irrelevant” in law.
This is the case in particular where the violation of the essential personal rights of individuals (Persönlichkeitsrechte, droits de la personnalité), which are protected by Art. 28 SCC, is alleged.Footnote 20 These rights are central in disputes concerning sanctions pronounced by sports associations and federations and in relation with players’ transfers. Not allowing an athlete to participate in organized sports, be it in competition or in training, e.g., as a sanction for violating sports regulations, is admissible only if the sanctioning entity can establish a legally valid justification which can be a public interest, the private interest of the federation to sanction undesirable behavior such as doping, cheating or insults and other grounds. Courts do therefore do not necessarily accept athletes’ demands and uphold the decisions of the sports organizations if they can establish a preponderant interest on their part which justifies the violation of personal rights the claimant. Nonetheless, the intervention of the courts and the application of State law have been instrumental for the deficiencies in the regulations and procedures to be pointed out and for inducing sports organizations to emerge from the early, unsophisticated ways of dealing with the growing complexity of issues in world sports.
As a consequence, considerable improvements of the internal procedures and the substantive content of the statutes and bye-laws of the sports organizations were achieved over the period 1970–2000. They were mainly of procedural nature in order to guarantee the respect of the athlete’s or club’s right to be heard, to be granted access to the acts of the procedure, to be able to produce evidence and to obtain written notification of decisions. Such prerogatives which are normal in all venues of life governed by the rule of law guarantee that accusations and sanctions are not unjustified which would amount to a serious violation of the personal rights of the defending party. New material requirements were also followed up on: sanctions and other obligations of members were properly spelled out in the regulations, as well as the obligation for decisions to comply with regulations and to be taken by statutory organs. In particular, the rules of the IFs and the Olympic organizations were completed and the references to the rules of other entities down into the pyramid of sports organization as well as to contractual partners were perfected.Footnote 21 This in turn led to the creation of uniform rules applying to the internal sanctioning processes at all levels, which was of importance for the fight against doping’s increase in severity in the early 1990s. The licensing process and transfer of players was also given a better regulatory frame. Last but not least, communication was enhanced among the actors of world sports which had become an absolute necessity taking into consideration the international development of sports on all levels.
As a result of the process of reconsidering the interests involved in sports, by the end of the 1980s State courts had left no doubt as to the fact that rules and decisions of sports associations, including those organizing the sporting activities, can be challenged in court and that, in other words, contrary to the expectations within the sports governing bodies, their autonomy is not unlimited. Given the important interests at stake, it did no longer appear justified to exclude sports-related rule and decisions applying them, in particular concerning contractual relationships in sports, (most) sanctions for the violation of the associations’ rules, as well as concerning problems with hooliganism and racism, from judicial review in democratic countries based on the rule of law. Today, if and when disputes of the sports world are submitted to Swiss courts (see on this subject Sect. 3. Below), only decisions of referees on the playing field are considered as irrelevant in law, because they are based on Rules of the Game, and will still not be reviewed by Swiss courts. All other claims are qualified as being based on a dispute concerning the application of a Rule of Law and are reviewed by courts on the basis of Art. 75 SCC. This also transpires in arbitral awards. In the light of these developments, it is astonishing to see the writ of the Swiss government in the cases Mutu & Pechstein before the ECtHR state that “CAS functions on the basis of an organization and rules totally independent of the State.”Footnote 22
Similar legal problems as those which Swiss courts had to decide on were faced by jurisdictions in other countries and in particular by the bodies of the European Union. Issues in professional sports, in particular transfers and admissions to competition of players within the European Union and associated countries increased and the sports governing bodies were reigned in to the extent necessary to guarantee the application of EU law, in particular as concerns free movement of workers.Footnote 23 The awareness of the European Union of the issues of the sporting world was of considerable importance for the image of sports changing from that of a legally irrelevant pastime to that of an economic activity with parties in conflict entitled to the protection of the law and the courts.
This being said, self-regulation in sports has by no means come to an end. As to the rulings applying Swiss law, they were only reminders of the overall limits to be respected by any association, and leaving therefore still considerable room for self-regulation. Additionally, sports organizations still benefit from a certain advantage over associations in other fields, with a small, but not unimportant fragment of the Rule of the Game theory still upheld by Swiss courts: jurisdiction will be declined by them for acts and decisions which take place on the playing field and have no effect before and beyond the duration of the game or match, i.e., in particular, the decisions of field referees during the game as to the behavior by players or to the way the game is conducted.
Self-regulation and the liberal approach of Swiss courts to sports also allowed the international sports governing bodies and the lower federations to put in place arbitration as a means to settle conflicts within the sporting community, thus reducing the influence of State law and State courts.