Swiss Federal Tribunal Rules That Sporting Succession Is Compatible With Public Policy

The concept of sporting succession – in a nutshell, the obligation of a club succeeding a bankrupt club to settle the latter's debts and to bear the consequences of a possible default in payment – was enacted in the regulations of FIFA for the first time in Art. 15 Para. 4 of the 2019 edition of the FIFA Disciplinary Code (“FDC”):

“The sporting successor of a non-compliant party shall also be considered a non-compliant party and thus subject to the obligations under this provision. Criteria to assess whether an entity is to be considered as the sporting successor of another entity are, among others, its headquarters, name, legal form, team colours, players, shareholders or stakeholders or ownership and the category of competition concerned.”

In the FDC edition 2023, this provision has been moved to Art. 21 Para. 4 FDC.

In the case law of FIFA and CAS, the concept of sporting succession was recognized already for about a decade before the enactment in the FDC. The enactment of sporting succession in the above-cited provision is thus to be considered as a codification of pre-existing case law. To further understand the topic of sporting succession, the Author refers to his Book Insolvency of Football Clubs and Sporting Succession, which was published in August 2022.

The concept of sporting succession raises questions as to its compatibility with public policy, i.e. the essential and widely recognised values which, according to the prevailing views in Switzerland, should form the basis of any legal order. Incompatibility with public policy is one of the grounds on which an award of a Swiss arbitration tribunal can be appealed against according to Art. 190 Para. 2 let. e of the Swiss Private International Law Act (“PILA”).

On this basis, the Swiss Federal Tribunal (“SFT”) recently dealt with the question of compatibility of the concept of sporting succession with public policy in two appeal proceedings against awards of the CAS, i.e. in SFT 4A_616/2021 and in SFT 4A_246/2022.The following analysis of these cases shows that FIFA’s concept of sporting succession can be considered as tested and approved by the Federal Tribunal.