Philippine Swimming Inc. v. World Aquatics

II. FACTUAL BACKGROUND

6. The Panel expresses its gratitude to the Parties for their comprehensive, detailed pleadings. While the Panel has carefully considered these pleadings, ultimately the disposition of this case rests on a discrete and narrow point, namely whether this appeal can be decided on the merits or dismissed on grounds of mootness of its object. The Panel therefore focuses on the few texts and evidential materials that are necessary to decide this point.

A. FINA’s December 2022 Decision

7. On 3 December 2022, FINA, through the FINA Executive Director Brent J Nowicki, addressed a letter to PSI’s Board Chair and PSI President, Ms Maria Lailani M Velasco, which read as follows in relevant part (emphasis added):

“Following your meeting with Mr. Taja Al Kishry on 22 November, Mr. Al Kishry’s findings were presented to and discussed within the FINA Bureau.

The FINA Bureau discussed various complaints received by the FINA Office concerning matters of inter alia poor governance principles within your National Federation. For this reason, and as a matter of last resort, the FINA Bureau has confirmed the implementation of a Stabilization Committee, as set out in C 10.6 of the FINA Constitution […]

Effective immediately, the Stabilization Committee shall run all day-to-day operations of Philippine Swimming Inc.[,] conduct the proper and necessary amendments of the Constitution and organize and conduct a new election. This means that any Philippine Swimming Inc. board members shall no longer be recognized as representatives (legal or otherwise) of Philippine Swimming Inc. […]”.

8. On 15 December 2022, FINA sent a further letter to PSI, in the following terms (emphasis added):

“Following the Bureau meeting of 12 December 2022, the FINA Bureau has confirmed the implementation of a stabilization committee, as set out in C 10.6 of the FINA Constitution […]

The recognition of Philippine Swimming, Inc. is now deemed withdrawn and the stabilization committee will act as a reform and electoral committee in its place. The term of appointment for the stabilization committee will expire no later than 6 months after appointment by the Bureau and may be extended as necessary. The participation of athletes in FINA events and/or Olympic Games during the installation of the stabilization committee shall not be impacted.

Effective immediately, the stabilization committee shall run all day-to-day operations of Philippine Swimming Inc.[,] conduct the proper and necessary amendments of the Constitution and organize and

conduct a new election. This means that any Philippine Swimming Inc. board members shall no longer be recognized as representatives (legal or otherwise) of Philippine Swimming Inc”.

9. PSI characterizes the communications of 3 and 15 December 2022 as constituting each a separate decision. This may perhaps be accurate in a formal sense, in that the 15 December 2022 communication states that it was issued following a Bureau meeting which took place on the 12th of December, after the communication of the 3rd of December. In substance, however, the 15 December communication conveys “confirm[ation]” of the Bureau’s earlier decision to put in place a stabilization committee; and both communications contain an identically worded operative paragraph starting with the words “effective immediately”. Thus, it is convenient in this Award to refer to the communications of 3 and 15 December 2022 compendiously, as the “December 2022 Decision”.

10. Further, it is common ground between the Parties that the December 2022 Decision comprised two elements, while the Parties disagree whether each of these is to be regarded as a measure in its own right:

i. The “appointment of a ‘Stabilization Committee’ to run PSI’s affairs”;

ii. The “withdrawal of recognition of the PSI’s [Board members] as ‘representatives’ of PSI”.

11. At the outset of the case, it was contended by PSI that the December 2022 Decision also comprised a further measure, namely the “withdrawal of the recognition of PSI as a FINA Member”. PSI’s reading was justified, given that the 15 December 2022 communication by FINA states that “[t]he recognition of Philippine Swimming, Inc. is now deemed withdrawn”. Nevertheless, through the exchange of subsequent pleadings and in the light of subsequent events, it has been clarified and is now common ground that the December 2022 Decision did not result in withdrawal of PSI’s membership in FINA.

12. Indeed, that was made plain in an Order issued by the Deputy President of the CAS Appeals Arbitration Division on 2 February 2023 (the “Deputy Division President”). This Order was issued upon an application by PSI for provisional measures, lodged on 20 December 2022. (As this Panel was yet to be fully constituted, the application was ruled upon by the Deputy Division President, pursuant to Article R37 of the CAS Code.) PSI’s application was dismissed chiefly on the ground that while “withdrawal of recognition of PSI as a World Aquatics member would undoubtedly have caused irreparable harm to [PSI]”, no such withdrawal had in fact occurred. The Order records the following findings (at paragraphs 69–70):

“[P]ursuant to the FINA Constitution, the appointment of a Stabilisation Committee does not entail the withdrawal of recognition of the member concerned. Indeed, pursuant to Article C 10.6 of the FINA Constitution, the mandate of the Stabilisation Committee may only include the management of the daily affairs of the member, the establishment of a debt repayment plan, the review and amendments of the member’s statutes and the organisation and conduct of elections. By contrast, the ‘withdrawal of recognition’ is listed amongst the sanctions which can be taken against a member federation pursuant to Article C 12.2 (d) of the FINA Constitution ‘if duties and obligations to FINA are not fulfilled’,

‘in case of violation of the FINA Rules and/or decisions of the Congress and/or decisions of the Bureau and Executive, or […] for bringing the Aquatics sport and/or FINA into disrepute’.

The Deputy Division President welcomes the clarifications provided in [respect of the measures imposed by the FINA Bureau in the December 2022 Decision] by the Respondent in its Rejoinder and in its Second Rejoinder. Nevertheless, the Deputy Division President considers that the wording used in the 15 December Letter was unfortunate, to say the least. Such wording indeed gave the impression – both to PSI and to anyone outside PSI – that the recognition of PSI as a member federation of the Respondent had been withdrawn, thus leaving the Philippines without a member federation […] Ultimately, the fact that the Respondent clarified in the present procedure that PSI ‘is and remains WA’s recognized National Federation of the Philippines’ and – most importantly – its letter to the Stabilisation Committee[2] clarifying that the latter did not have ‘the right for any further measures, for example, to set-up and/or seek recognition of a new Aquatics’ federation in the Philippines’ lead the Deputy Division President to consider that there was no withdrawal of the recognition of PSI as a member federation of World Aquatics. […]”.

13. The Panel respectfully concurs with the Deputy Division President’s remark that “the wording used in the 15 December Letter was unfortunate, to say the least”. It is undesirable for the content of such decisions to engender unnecessary and avoidable litigation.

14. For present purposes little needs to be said as to the background to the December 2022 Decision, and only by way of context. FINA’s communication of 3 December 2022 refers to “findings” by Mr Al Kishry. He was a member of the FINA Bureau (and now a member of the WA Bureau) and around November 2022 he was tasked with the mission of investigating complaints said to have been received by FINA “from some members, athletes and officials against PSI”. These complaints have not been placed in the record of the present proceedings.

15. It appears that the reasons which motivated the December 2022 Decision were communicated to PSI by WA only some two months later, in a letter of 9 February 2023. They were said to be grounded in complaints related to:

“Unethical and discriminatory actions by [Ms Velasco] and the PSI Board against athletes and coaches;

Non-compliance with the PSI By-Laws during the election procedure in April 2022 (e.g., issues in relation to the convocation of the Congress, etc.);

Integrity issues related to membership applications;

Lack of transparency and good governance by the PSI President and the Board, as well as noncompliance with the World Aquatics Constitution”.

16. PSI strongly denies the veracity and accuracy of these statements. PSI also asserts that it has never received evidence of the alleged complaints or Mr Al Kishry’s report of findings, nor

2 Quoted at paragraph 18 below.

has it been given an opportunity to respond to them. Indeed, PSI issued an official statement to that effect on 5 December 2022.

17. The December 2022 Decision is the sole object of the present appeal proceedings. As explained at paragraphs 59–61 below, in accordance with Article R47 of the CAS Code, no other FINA/WA decision may be the object of the present appeal.

B. WA’s February 2023 Decision

18. As it happened, matters evolved in the course of January–February 2023. On 13 January 2023, WA wrote to the Stabilization Committee in the following terms:

“[W]e understand that the Stabilization Committee:

▪ manages the daily affairs of the Philippine Swimming Inc.;

▪ reviews and amends the Philippine Swimming Inc. statutes and ensures their compliance with the FINA Constitution before duly submitting them for approval to the Member’s Congress; and

▪ organizes and conducts elections.

The mandate of the Stabilization Committee is […] to properly reform the current and existing Philippine Swimming Inc. However, and simply for the avoidance of doubt[], it does not entail the right for any further measures, for example, to set-up and/or seek recognition of a new Aquatics’ federation in the Philippines”.

19. The Stabilization Committee replied on 23 January 2023 to acknowledge this communication as setting forth the “directives” comprised within its “mandate”.

20. Thereafter, the disagreement between the Parties evolved, and in some ways escalated. PSI accused WA of withdrawing its status as a member and of seeking to set up (through the Stabilization Committee) a competing national federation, United Philippines Aquatic Inc. – an entity which appears indeed to have been established. It also appears that PSI, citing the pendency of this appeal, stated an intention to “continue to function in accordance with [its] mandate as officers of PSI under the Revised Corporation Code and PSI’s By-Laws”.

21. For its part, WA took issue with what it saw as PSI’s failure to lend support to the Stabilization Committee and with the stated intention of PSI’s Board to continue to exercise its functions. On 9 February 2023, WA stated that it was “considering imposing a sanction […] [on] PSI, which may consist, in particular, of a suspension of PSI”.

22. On 21 February 2023, WA announced (through a communication to CAS) that it had taken the decision to terminate the mandate of the Stabilization Committee. The following day, WA communicated to PSI its decision in fuller terms (emphasis added):

“[T]he World Aquatics Bureau met yesterday, 21 February 2023, and took into due consideration all the arguments submitted by PSI. Unanimously, the World Aquatics Bureau held the following:

While the World Aquatics Bureau noted that PSI denied all allegations, it considers the allegations against PSI to be proven and very serious. World Aquatics has tried to resolve the many issues with PSI, but PSI and in particular, certain members of its Executive (the President and Members of the Board of Trustees) have ever since vigorously resisted to any assistance and help for the necessary reforms, showing no interest and no willingness to act in accordance with World Aquatics Constitution nor with the principles enshrined in such Constitution. […]

In view of the above, the World Aquatics Bureau considers it to be established that PSI has violated the following provisions of the World Aquatics Constitution: Art. 7 (Obligations of Members), namely 7 a), 7 b), 7 c), 7 e), 7 f), 7 i) and 7 l). With this, PSI has violated its obligations towards World Aquatics, has violated the World Aquatics Constitution, and has proven to be unwilling and unable to preserve its independence […]

Accordingly, based on Art. 8.3 lit. a), b), d), e) and f) as well as Art. 8.4 of the World Aquatics Constitution, the World Aquatics Bureau decided yesterday unanimously to suspend PSI and to appoint, in accordance with Art. 8.7 lit. b) of the World Aquatics Constitution, an Electoral Committee with the mandate to take all steps necessary to conduct and hold new elections. […]

As to the suspension, according to Art. 8.6 of the World Aquatics Constitution, a suspended Member may not exercise any of its membership rights during the period of suspension, including without limitation the right to attend and participate in a Congress of World Aquatics. […]”.

23. WA’s decision, as communicated on 22 February 2023 (the “February 2023 Decision”), was appealed by PSI on 13 March 2023. Separate CAS proceedings (CAS 2022/A/9489) have been instituted to determine that appeal. Once again, the February 2023 Decision is not the object of the present proceedings.

III. THE PRESENT PROCEEDINGS

24. On 20 December 2022, PSI instituted the present proceedings by lodging a Statement of Appeal with CAS. This was directed at the “revers[al]” of the December 2022 Decision and was accompanied by a witness statement by PSI’s Board Chair and President, Ms Velasco. PSI nominated Ms Andrea Carska-Sheppard as arbitrator. There is no dispute that the appeal was lodged in a timely manner.

25. Also on 20 December 2022, PSI filed an urgent application for an order staying enforcement of the December 2022 Decision and the measures set out therein. The substance and procedural history of that application are described in the Order of 2 February 2023 by which (as this Panel was yet to be fully constituted) the Deputy Division President dismissed the application, as described at paragraph 12 above.

26. On 23 December 2022, the CAS Court Office wrote to PSI that “pursuant to Article A8 of the Arbitration Rules applicable to the CAS Anti-Doping Division [or ADD], ‘[a]rbitrators appearing on the

special list of arbitrators for CAS ADD may not serve as an arbitrator in any procedure conducted by the CAS Appeals Arbitration Division’”. Since Ms Carska-Sheppard is on the special ADD list, PSI was given five days to nominate another arbitrator.

27. On 29 December 2022, PSI informed the CAS Court Office that its Statement of Appeal, together with additional annexes and exhibits submitted on that date, should be considered as its Appeal Brief, pursuant to Article R51 of the CAS Code. Also, PSI nominated Dr Michael Hwang SC as arbitrator.

28. On the same day, the CAS Court Office invited WA to nominate an arbitrator by 9 January 2023, pursuant to Article R53 of the CAS Code. Under that provision, “[i]n the absence of a nomination within such time limit, the President of the [CAS Appeals Arbitration] Division shall make the appointment”.

29. On 10 January 2023, the CAS Court Office noted that the Respondent had not nominated an arbitrator within the prescribed deadline and informed the Parties that the Division President, or her Deputy, would proceed with the appointment in lieu of the Respondent.

30. On 13 January 2023, the CAS Court Office fixed the first advance of costs in the proceedings, pursuant to Article R64.2 of the CAS Code.

31. Between 12 and 20 January 2023, the Parties explored the possibility of extending by consent the time-limit for WA’s nomination of an arbitrator. In the end, no such consent was achieved. Accordingly, on 23 January 2023, the CAS Court Office informed the Parties that “the President of the CAS Appeals Arbitration Division, or her Deputy, will appoint an arbitrator in lieu of the Respondent”. On 24 January 2023, Mr Dolf Segaar was nominated as arbitrator by the Deputy Division President.

32. On 25 January 2023, the CAS Court Office invited the Appellant to pay the entire advance of costs, as the Respondent had indicated that it would not pay its share of the advance. PSI duly defrayed this amount.

33. On 31 January 2023, the CAS Court Office invited WA to submit its answer to the appeal and any objections to CAS jurisdiction by 20 February 2023.

34. On 6 February 2023, the constitution of the Panel was completed by the appointment of Dr Georgios Petrochilos KC by the President of the Appeals Arbitration Division. This was notified to the Parties by the CAS Court Office by letter of the same date.

35. On 8 February 2023, PSI filed a new request for provisional measures, titled “Second Urgent Application to Stay the Execution of the Appealed Decisions” on the basis of “new elements”, together with an expert legal opinion by Mr Benito A Cataran, dated 6 February 2023 (the “Second Application”). The Parties’ submissions and the procedural history relating to the Second Application are addressed in a separate Order issued by the Panel on the same date as this Award.

36. On 15 February 2023, PSI filed an unsolicited “Urgent Motion for Leave to Admit Submission” concerning the Articles of Association of United Philippines Aquatic Inc., which had been registered with the Philippine Securities and Exchange Commission.

37. On 16 February 2023, the CAS Court Office conveyed to the Parties the Panel’s directions that “no sanctions decision shall take effect pending the Panel’s determination of the Appellant’s [Second Application]”.

38. On 17 February 2023, WA wrote to the CAS Court Office to note that it was entitled to conduct separate proceedings and take new decisions on matters outside the scope of the December 2022 Decision.

39. On 21 February 2023, PSI filed an unsolicited “Urgent Manifestation (Re: Respondent’s soonto-be issued ‘Sanctions Decision’ against PSI)”, stating that WA intended to issue a “sanctions decision” against PSI.

40. The same day, WA addressed to CAS the communication referred to at paragraph 22 above, regarding the decision of the WA Bureau to terminate the mandate of the Stabilization Committee appointed in December 2022. On this basis, WA requested CAS to close the present proceedings, without any costs imposed on the Respondent.

41. On 23 February 2023, PSI filed a further “Urgent Manifestation (Re: Respondent’s Sanctions Decision against PSI dated 22 February 2023)”, informing CAS of WA’s communication of 22 February 2023, together with a motion to be granted a period of time to submit (i) an opposition to WA’s request to terminate the proceedings and (ii) a reply to WA’s 20 February 2023 Answer to PSI’s Second Application.

42. On 7 March 2023, PSI filed an “Opposition to Respondent’s Request to ‘Close’ the Proceedings and ‘Remove’ it from the CAS Roll”.

43. On 9 March 2023, PSI filed a further “Urgent Manifestation (Re: Respondent’s Continued Violation of the 16 February 2023 Letter of the CAS)”, asking the Panel to direct WA not to give effect to the February 2023 Decision.

44. On 13 March 2023, PSI requested that the present appeal be consolidated with its appeal (noted at paragraph 23 above) against WA’s February 2023 Decision.

45. On 14 March 2023, WA filed its Rejoinder to PSI’s Second Application, whereby WA requests this Panel “to close the present proceedings and to remove the case from the CAS Roll”.

46. On 15 March 2023, the CAS Court Office informed the Parties that it was not possible to consolidate the present appeal with PSI’s appeal against the February 2023 Decision (CAS 2022/A/9489) given that the two appeals are directed against different decisions. The Panel has not had sight of pleadings and submissions in case CAS 2022/A/9489.

47. On 16 March 2023, WA reiterated its request to terminate the present proceedings and the other requests for relief set out in its Rejoinder to PSI’s Second Application, including that PSI be ordered to pay all costs of the present proceedings.

48. On 20 March 2023, the Panel clarified that, in light of the separate CAS proceedings on foot relating to the February 2023 Decision (CAS 2022/A/9489), “the present Panel’s directions dated 16 February 2023, to the effect that ‘no sanctions decision shall take effect pending the Panel’s determination of the Appellant’s [Second Application], are to be read as excluding World Aquatics’ decision of 22 February 2023”.

49. On 21 March 2023, the Panel directed PSI to comment on WA’s request for PSI to be ordered to pay all costs.

50. On 24 March 2023, PSI submitted a “Comment on Respondent’s Letter dated 16 March 2023”, reiterating its opposition to WA’s request to close the present proceedings and responding to WA’s request that PSI be ordered to pay all costs of the proceedings.

51. On 20 April 2023, PSI filed an unsolicited “Motion to Resolve” requesting, in the event the Panel considers the appeal not to be moot, that the Respondent be directed to file its Answer; and, if the appeal is considered to be moot, reiterating its claim for costs.

IV. SUMMARY OF PARTIES’ ARGUMENTS AND REQUESTS FOR RELIEF

52. The Parties’ respective positions, so far as relevant to the substantive appeal, may be described briefly.

53. WA seeks a decision closing the proceedings. It argues that the jurisdiction of this Panel is confined to the December 2022 Decision, which (WA claims) has been entirely superseded by the February 2023 Decision. This applies not only to the appointment of the Stabilization Committee (whose mandate, it is common ground, has been terminated) but also to the withdrawal of recognition of the members of PSI’s Board as representatives of PSI. Nonrecognition of the Board members, WA says, was “not an additional measure, but a consequence of the implementation of a stabilization committee”. The termination of the Stabilization Committee’s mandate is said to have swept away that consequence as well. It follows, argues WA, that the present appeal no longer has any object, such that the proceedings must be “closed”.

54. Accordingly, WA seeks the following relief (set out in its Rejoinder to the Second Application):

“(1) to close the present proceedings and to remove the case from the CAS Roll;

(2) in any event, to reject Appellant’s unsolicited submissions as being inadmissible”.

55. For its part, PSI rejects the notion that this appeal is moot. PSI’s position is helpfully summarized in a “Comment” submission of 24 March 2023. It states in relevant part (omitting citations):

“5.1 Respondent’s Appealed Decisions [ie, the December 2022 Decision] have produced, and continue to produce, effects and consequences prejudicial to PSI.

5.1.1. It is false for Respondent to assert that the Appealed Decisions supposedly did only one thing – create a ‘Stabilization Committee’. This claim is totally belied by the words Respondent itself used in its Appealed Decisions which clearly show that, apart from creating the ‘Stabilization Committee,’ Respondent also withdrew recognition of PSI’s Board of Trustees (‘BOT’) as ‘representatives (legal or otherwise)’ of PSI.

5.1.2. Respondent’s 3 December 2022 letter 2 (the ‘3 December 2022 Decision’) states that ‘any (PSI) board members shall no longer be recognized as representatives (legal or otherwise) of (PSI)’.

5.1.3. Similarly, Respondent’s 15 December 2022 letter 3 (the ‘15 December 2022 Decision’) states that ‘any (PSI) board members shall no longer be recognized as representatives (legal or otherwise) of (PSI)’.

5.2. When Respondent’s Bureau ‘terminated’ the ‘mandate’ of the Stabilization Committee on 21 February 2023, Respondent did not restore the recognition of PSI’s BOT as ‘representatives (legal or otherwise) of (PSI)’. There was no indication in Respondent’s 21 February 2023 letter to the CAS that, together with the termination of the mandate of the ‘Stabilization Committee,’ Respondent’s Bureau had also decided to again ‘recognize’ PSI’s BOT as PSI’s ‘representatives’.

5.3. To this day, Respondent has not categorically stated that, with the termination of the ‘Stabilization Committee,’ it now recognizes PSI’s BOT as ‘representatives’ of PSI.

5.4. On the contrary, by creating an ‘Electoral Committee’ for PSI through its 22 February 2023 Sanctions Decision, Respondent confirmed that it continues not to recognize PSI’s BOT as ‘representatives’ of PSI. The creation of an ‘Electoral Committee’ with a mandate to ‘conduct’ new elections for PSI, presupposes that PSI’s BOT is vacant and that Respondent does not recognize PSI’s existing BOT”.

56. PSI requests that the Panel:

“DENY Respondent’s request to ‘close’ the proceedings and ‘remove’ the case from the CAS Roll”;

“[…] GRANT this APPEAL;

REVERSE the Appealed Decisions issued by the FINA Bureau, as reflected in the 3 and 15 December 2022 letters […]; and

DIRECT Respondent FINA to follow due process and to afford PSI its right to be heard in any future disciplinary case or investigation, consistent with the FINA Constitution and basic principles of justice and fairplay”.