Author: Viktoria Heinze
Published by Winter – Dávila & Associés in Paris, on may 17th 2021.
Before filling a claim to a court of arbitration in the event of a dispute, it is advisable to check the arbitration clause for its effectiveness, because arbitration clauses may be invalid and the way to the state courts might be open.
In Germany, the Frankfurt/Main Regional Court (Case No. 2-06 O 457/19) recently had to deal with the validity of an arbitration clause in the relationship between the top association and the athletes.
It is advisable to analyse the ending of the employment contract between a player and his club by taking three elements into account.
A – now former – German female beach volleyball team filed a claim for damages against the German Volleyball Association (DVV) before the Regional Court of Frankfurt/Main. The reason for the lawsuit was that the team had not been registered by the DVV for international competitions since April 2019. At the beginning of the 2019 season, the team was the fourth best German women’s beach volleyball team in the world rankings. The DVV nominated other teams for the international competitions, although the plaintiffs were in part more successful athletically than the other teams (nominated by the DVV). By way of an action for damages, the women’s beach volleyball team took legal action against the DVV to recover the tournament prize money lost due to the lack of opportunity to participate.
The players’ respective contracts with the DVV contained an arbitration clause, so that the DVV invoked this arbitration clause before the Frankfurt/Main Regional Court, which was held invalid by the Frankfurt/Main Regional Court.
In the arbitration clause in dispute, claims to the ordinary state courts were excluded and disputes were to be decided by a court of arbitration. The arbitration court was to consist of three members, namely the Chairman of the Association Court as Chairman and one member each to be nominated by the athlete and by the DVV.
On what bases did the Frankfurt/Main Regional Court declare the arbitration clause invalid?
1- Arbitration Clause in General Terms and Conditions – Insufficient Composition of the Arbitral Tribunal
According to a decision of the Federal Court of Justice (BGH) applied by the Frankfurt/Main Regional Court, an arbitration agreement in general terms and conditions is invalid if the composition of the arbitral tribunal to be appointed makes a critical examination of all legal aspects of the legal dispute to be decided unlikely, for example because the arbitral tribunal does not necessarily consist of lawyers (cf. BGH NJW 1992, 575 et seq.). Since, in the opinion of the Frankfurt/Main Regional Court, the DVV’s legal regulations do not contain any requirements for the chairman of the arbitration court and its assessors, it considered the arbitration clause to be invalid for this reason alone.
2- Arbitration clause – No voluntary submission
Furthermore, according to the Frankfurt/Main Regional Court, the clause was also invalid “because the plaintiffs did not voluntarily submit to it”. The Frankfurt/Main Regional Court ruled in light of the decision of the European Court of Human Rights (ECHR) in the Pechstein case. The Regional Court of Frankfurt/ Main states that in the case of professional competitive athletes, involuntary submission to arbitration must be assumed if the professional athletes “are faced with the choice of accepting an arbitration clause in order to be able to earn a living by practicing their sport, or not accepting it and thus completely foregoing their livelihood by practicing their sport.” In the view of the Frankfurt/Main Regional Court, it had not been proven by the DVV that the plaintiffs (the beach volleyball team) actually had the choice at the time to conclude the arbitration clauses or not. However, even in the case of an uncritical signing of the arbitration clauses, the Regional Court of Frankfurt/Main was of the opinion that an involuntariness had to be assumed.
The Frankfurt/Main Regional Court awarded the beach volleyball players a claim for damages in the amount of USD 17,000 against the DVV.
The decision is not yet final because the DVV has appealed. However, it is expected that the decision of the Frankfurt/Main Regional Court will stand with regard to the arbitration clause.
Original language of the article: German