The case involves a dispute between W., a Swiss athlete, and X. SA, a company representing the sports brand Z. INTERNATIONAL, over the termination of a sponsorship contract. The Court of Arbitration for Sport (CAS) ruled on the matter, addressing key legal principles related to sponsorship agreements. The original contract, signed in 1985, required W. to promote Z. products by wearing their equipment during competitions, excluding international events with the national team, and participating in promotional activities. The contract was set to expire in 1988, but negotiations for a new agreement began in 1988, leading to a verbal agreement in February 1989, which included a monthly payment of CHF 2,000 and performance-based bonuses. Despite W.'s manager confirming acceptance of the terms, X. SA did not respond, though it later made partial payments.
In 1989, W. took up bobsleigh and was photographed wearing a competitor’s brand, Y., during training with the national team. X. SA terminated the contract in November 1989, citing W.'s association with competing brands as incompatible with their sponsorship philosophy. W. contested the termination, arguing the contract was valid and demanding unpaid fees and bonuses. The dispute was referred to CAS in 1991. The tribunal examined whether the termination was justified, noting that fixed-term contracts are not terminable unless for just cause. It found that W. had breached his duty by not informing X. SA about his bobsleigh activities involving a rival sponsor. However, X. SA also failed to formalize the new contract and delayed payments, contributing to the dispute. The tribunal concluded that while W. was at fault, X. SA’s termination lacked sufficient justification, and both parties shared responsibility for the contractual breakdown.
The CAS determined its jurisdiction based on the arbitration agreement signed by both parties, confirming it had the authority to adjudicate the private dispute involving financial interests arising from sports activities. The core issue was whether a valid two-year contract had been formed between W. and X. SA in February 1989. W. argued that the contract resulted from an offer by X. SA on February 14, 1989, and his acceptance via a letter on February 22, 1989. X. SA, however, contested this, claiming only a provisional oral agreement existed, renewable monthly during negotiations over W.'s counter-performance obligations. The CAS analyzed the contractual formation under Swiss law, which requires mutual and concordant declarations of will (offer and acceptance) to establish a contract. The tribunal found that X. SA's February 14 letter constituted a firm offer, as it followed months of negotiations and aligned with W.'s prior demands.
The Tribunal concluded that a valid contract was formed based on the offer dated February 13, 1989, and the acceptance on February 22, 1989, as there was clear alignment of the parties' intentions regarding the contract's duration, payment terms, and W.'s obligations. The Tribunal rejected X. SA's argument that there was no agreement on W.'s obligations, noting that no evidence supported the claim that the offer implicitly required Z. INTERNATIONAL's approval. The Tribunal also found no proof of an oral contract differing from the written offer or one renewable on a monthly basis. The Tribunal examined whether the parties intended to condition the contract's validity on a specific form, concluding that no such requirement existed under Swiss law.
The Tribunal highlighted the contract's hybrid nature, involving W.'s public relations activities for X. SA and Z. INTERNATIONAL, which resembled a service agreement, while the use of W.'s name and image for advertising aligned with a license agreement. The contract also included aspects of an agency relationship, where W. acted as a promotional agent to enhance the sponsor's brand. Legal doctrine supported classifying such sponsorship contracts as sui generis, combining elements of named and unnamed contracts. The Tribunal noted that fixed duration was a key feature of sponsorship agreements, making them incompatible with unilateral termination rules applicable to mandates.
Regarding termination, the Tribunal ruled that contracts with a fixed term could not be terminated prematurely without just cause, referencing Swiss legal principles derived from employment law. It rejected X. SA's claim of valid termination, as no just cause was demonstrated. The Tribunal affirmed that the parties' relationship required continuity, with X. SA relying on W.'s performance over time and W. depending on consistent payments. The