The case involves a legal dispute between the International Triathlon Union (ITU) and Pacific Sports Corporation Inc. (PSC) concerning the organization of the 1996 Triathlon World Championships in Cleveland, Ohio. The conflict arose from PSC's failure to fulfill its contractual obligations, including providing a minimum of $100,000 in prize money as agreed in their 1993 contract. ITU filed for arbitration with the Court of Arbitration for Sport (CAS) in December 1996, later attempting to hold PSC's president, Jack C., personally liable by piercing the corporate veil. The CAS panel ruled against this, stating that Swiss law governed the dispute and that insufficient evidence existed to hold Jack C. personally accountable. The panel emphasized that punitive damages require prior agreement or malicious conduct, focusing instead on compensatory damages to restore ITU to its pre-breach position.
ITU claimed economic losses due to alleged damage to sponsorship revenue, but the panel rejected these claims due to lack of evidence and insufficient notice for an expert witness. The dispute narrowed to unpaid prize money, accommodation, and transportation costs. PSC argued it had held prize money in a joint account with ITU's representative as a signatory, but the panel found PSC in default. During hearings, Jack C. offered to pay unpaid athletes personally, leading to a consent agreement. However, he failed to comply, prompting the court to order payment by May 28, 1999. ITU sought reimbursement for accommodation ($29,581.11) and transportation ($1,049.70), claiming PSC withdrew promised support. PSC countered that ITU had breached the contract by failing to reimburse promotional expenses and secure adequate TV coverage. The panel ruled PSC should have invoked the contract's default clause rather than unilaterally withdrawing support, awarding ITU the claimed costs plus interest.
Procedurally, ITU covered PSC's share of arbitration costs, as PSC failed to pay, leading the panel to deem PSC's counterclaim withdrawn. Despite PSC's non-payment, it participated fully in hearings. The panel rejected PSC's request for a set-off, emphasizing adherence to contractual and procedural rules. The final award required PSC to pay ITU the specified amounts with 6% interest from December 8, 1996, along with full arbitration costs, including an additional $10,000 contribution to ITU's expenses. The remaining claims were dismissed, and the award was ordered to be published. The decision underscores the importance of contractual compliance, proper dispute resolution mechanisms, and equitable cost allocation based on the parties' conduct.