Foreign Arbitral Awards Must Undergo a Second Look in the EU

EU Member States may not confer the authority of res judicata on an arbitral award over a sports dispute linked to an economic activity within the territory of the Union, unless the consistency of that award with the principles and provisions of EU law which form part of EU public policy has first been subject to effective review by a court in the Member States concerned.

This was affirmed by the Grand Chamber of the Court of Justice of the European Union (CJEU) in its judgment of 1 August 2025 in Royal Football Club Seraing, C-600/23, EU:C:2025:617 (Seraing) regarding the enforcement in Belgium of an arbitral award issued by the Court of Arbitration for Sport (CAS) in Switzerland.

Background

In 2015, a Maltese financing company entered into an agreement with the Belgian football club RFC Seraing concerning third-party financing of football players. The financing agreements immediately caused legal dilemmas. On one hand, FIFA argued that the financing agreements violated FIFA’s regulations on player transfers. On the other, the Maltese company claimed that FIFA’s rules conflicted with EU law.

While FIFA’s disciplinary committee decided to sanction RFC Seraing by prohibiting the club from registering players for a specified period and imposing a fine of 150,000 Swiss francs, the Maltese company initiated court proceedings in Belgium seeking a declaration that FIFA’s player transfer rules were incompatible with the EU’s free movement provisions. RFC Seraing joined these proceedings as a co-claimant with the Maltese company.

The football club appealed the disciplinary committee’s decision to arbitral proceedings for the CAS in Switzerland, requesting its annulment on the grounds that it violated, among other things, EU law requirements on the free movement of workers and capital. CAS rejected the club’s claim, stating in its award that FIFA’s rules were justified by sporting reasons and could therefore legitimize any impact they had on free movement or other fundamental EU rights. RFC Seraing then attempted to have the CAS award annulled by the Swiss Federal Tribunal, but this was also unsuccessful.

After CAS issued its award, questions arose in the parallel Belgian court proceedings regarding how an arbitral award from a country outside the EU should be treated in relation to EU law principles of legal certainty. Under the United Nations Convention on the Recognition and Enforcmeent of Foreign Arbitral Awards (the New York Convention), arbitral awards from other contracting states must be enforced.

In Belgium, arbitral awards are granted the same legal effect as national court judgments. Since the Swiss award was issued during the ongoing proceedings, the Belgian appellate court considered itself obliged to recognize its res judicata effect without examining the substantive question of whether the player transfer rules complied with EU law.

The matter was appealed to Belgium’s Supreme Court, which decided to refer a question to the EU Court of Justice on the extent to which an arbitral award dealing with issues of EU law, but issued by an arbitration tribunal outside the EU, can be recognized as having legal effect within the EU.

Judgment

The Court of Justice initially noted that the right to effective judicial protection within the Union also applies to arbitration proceedings. In addition to setting general requirements for the nature of judicial review, the Court stated that a competent court must have the possibility to refer any question concerning the interpretation of EU law or the validity of an EU act to the Court of Justice under Article 267 TFEU. However, the Court emphasized that this requirement does not prevent individuals subject to EU law from agreeing that any disputes between them should be resolved through arbitration. The legal safeguards required in arbitration depend on whether the arbitration can be considered “voluntary” or “compulsory”.

Referring to the European Court of Human Rights’ ruling in Mutu and Pechstein v. Switzerland, the Court of Justice noted that parties may waive certain legal safeguards provided the arbitration is voluntary and the waiver is “free, lawful, and unequivocal”. The Court held that arbitration clauses entered into between sports federations, clubs, and players do not meet this standard, as the clauses are “unilaterally imposed” on the affected individuals, who have no real choice in participating in the activity (para. 92).

That arbitration clauses are compulsory does not mean they are prohibited. However, EU law imposes stricter requirements on such compulsory clauses compared to voluntary ones. EU law issues of fundamental importance adjudicated in compulsory arbitration must be reviewable by national courts. The Court concluded that such review requires the arbitration award to explain how EU law was interpreted. When, as in the present case, it is not possible to challenge an arbitration award in an EU Member State, equivalent requirements must be applied at the enforcement stage in an EU Member State. In this context, the Court noted that the New York Convention’s obligation to recognize and enforce international arbitration awards also allows contracting states to refuse recognition of an award that conflicts with that country’s ordre public.

Although the EU itself has not acceded to the New York Convention, all EU Member States have done so individually. As EU Member States, they are therefore obliged to refuse recognition or enforcement of foreign arbitral awards that conflict with the EU’s ordre public.

Comment

Seraing is a landmark case that will have influence and relevance for international arbitration. No matter where the arbitral tribunal has its seat, it must comply with the standards set out in the Seraing judgment if the arbitral award shall be recognised and enforced in an EU member state. In this aspect, the judgment builds on the longstanding international trend toward court-review of arbitral awards.

The trend toward court-review of arbitral awards gained prominence with the U.S. Supreme Court’s 1985 Mitsubishi Motors Corp. ruling, which established the “second-look doctrine.” The case addressed whether a Japanese arbitral award concerning U.S. antitrust matters could be recognized as a valid arbitral award in the United States. The Court held that a liberal approach to the validity of international arbitral awards could be balanced at the enforcement stage through the public policy exception. In practice, this gives U.S. courts the opportunity to take a “second look” at foreign awards instead of denying recognition outright simply because they might not meet strict validity requirements.

Under EU law, a similar concept exists through the principle of effectiveness, illustrated first by the Court of Justice’s decision in Eco Swiss, C-126/97, EU:C:1999:269. The Seraing case now clarifies and develops the principles for a “second look” to assure that EU law has been complied with that were set out in the Eco Swiss judgment.

As paragraphs 82 and following make clear, the “second look” requirement applies only to arbitral awards rendered outside the EU. Where the arbitral tribunal is seated within the EU, the ordinary procedure for challenging the award suffices to satisfy the requirement of judicial review by an EU court.

Another point that is worth highlighting is that the CJEU seems to take further steps on the path of distinguishing party autonomy blazed by the ECtHR in the Mutu and Pechstein case.

In Mutu and Pechstein, the ECtHR held that voluntary arbitration must be separated from compulsory arbitration. In that judgment, compulsory arbitration was not only such rare situations where mandatorily imposed by law, but depending on the balance of the agreement at hand. Whereas the ECHR has little to do with completely voluntary arbitration, it sets higher standards for compulsory arbitration. In the Mutu and Pechstein case, the ECtHR held that a professional athlete who wanted to compete on the global level had no choice but to sign the agreement containing the arbitration clause that exclusively referred all disputes to an arbitral tribunal. From parapraph 80 of Seraing, the Court of Justice draws parallels from this distinction in Mutu and Pechstein and seems to hold that this distinction is relevant also under EU law.

The judgment in Seraing underscores the importance of taking EU law seriously in arbitration. It not only opens new possibilities to parties in arbitration procedures, also it stresses the importance for arbitrators to draft awards that can withstand review. This development may also put pressure on national legislators to align arbitration laws more closely with EU law (see e.g., on this blog, the post Is a Swedish Arbitral Award Ever Final After Achmea?). A question that the Seraing judgment raises is whether Member States can allow for immediate recognition of foreign arbitral awards or whether EU law now requires that an exequatur procedure first is undertaken.

This aspect of the judgment will be further examined by Gilles Cuniberti in a forthcoming post on this blog. Stay tuned!