Paolo Barelli v. FINA

CAS 2022/A/9297 Paolo Barelli v. FINA

ARBITRAL AWARD delivered by the

COURT OF ARBITRATION FOR SPORT sitting in the following composition:

President: Prof. Dr. Eligiusz Krześniak, Attorney-at-Law in Warsaw, Poland Arbitrators: Prof. Massimo Coccia, Attorney-at-Law in Rome, Italy Alexander McLin, Attorney-at-Law, Lausanne, Switzerland

in the arbitration between

Paolo Barelli, Rome, Italy Represented by Étienne Campiche and Fabien Hohenauer, Attorneys-at-Law, HDC, Lausanne, Switzerland

-Appellant-

v.

World Aquatics (formerly Fédération Internationale de Natation), Lausanne, Switzerland Represented by Emanuel Cortada, Attorney-at-Law, Bär & Karrer, Zurich, Switzerland

-Respondent-

I. PARTIES

1. Mr. Paolo Barelli (the “Appellant” or “Mr. Barelli”) is a Member and the President of the Italian Swimming Federation (“FIN”), which is a member, in good standing, of World Aquatics.

2. World Aquatics (formerly Fédération Internationale de Natation or FINA1) (the “Respondent” or “FINA”) is an international sports federation recognized by the International Olympic Committee (“IOC”) as the sole and exclusive world governing body for aquatic sports. FINA is an association established and organized in accordance with Article 60 et seq. of the Swiss Civil Code.

3. The Appellant and FINA are hereinafter jointly referred to as the “Parties”.

II. FACTUAL BACKGROUND — A. Introduction

4. The present dispute revolves around the decision rendered by the FINA Ethics Panel on 8 November 2022 (the “Third Referral Decision”). In the Third Referral Decision, the FINA Ethics Panel (the “Ethics Panel”) found that there was “a clear conflict of interest as the Respondent was both the President of the LEN and of the Italian Swimming Federation, and as such signed an addendum which benefitted the Italian Federation without complying with the provisions of Article 11.3.2.3 as well as Article 11.5.1.5 of the [Ligue Européenne de Natation] (“LEN”)] Constitution” and banned the Appellant for a fixed period from participating in any Aquatic-related activities under the auspices of FINA or its members.

5. The pertinent facts and allegations based on the Parties’ written submissions and on the CAS files are summarized below. References to additional facts and allegations found in the Parties’ written submissions and evidence will be made, where relevant, in connection with the legal analysis that follows. While the Panel has considered all the facts, allegations, legal arguments, and evidence submitted by the Parties in the present proceedings, it refers in its award only to those submissions and evidence it deems necessary to explain its reasoning.

B. Background facts

6. The Appellant was elected President of FIN in 2000 and continues to serve in that capacity.

7. The Appellant was elected and acted as the President of LEN between September 2012 and February 2022.

According to Article 1 of the World Aquatics Constitution, in effect from 1 January 2023, FINA has been renamed World Aquatics.

8. The Appellant was also the Vice-President of FINA between 2017 and 2021.

9. On 9 March 2021, the Appellant, acting as the President of LEN, signed an agreement between LEN and FIN (the “Agreement”) for the 36th LEN European Championships in Swimming, Diving, Artistic Swimming, Open Water and High Diving to be held in Rome in 2022 (the “Rome Championships”). On behalf of FIN, the Agreement was signed by the FIN Secretary General, Mr. Antonello Panza. Under Article 16.1 of the Agreement, FIN was to pay to LEN the host fee of EUR 3,000,000 for the right to stage the LEN European Championships.

10. Two months later, on 10 May 2021, the Appellant, acting on behalf of LEN, signed an addendum (the “Addendum”) to the Agreement. On behalf of FIN, the Addendum was again signed by the FIN Secretary General – Mr. Antonello Panza.

11. The Addendum effectively reduced the fee due to LEN from FIN by an amount in the order of between EUR 500,000 and EUR 1,500,000. The ultimate reduction was to be calculated talking into account the Italian COVID-19 restrictions in place. Further, the share of the FIN’s marketing rights were increased from 50 to 60%.

12. The fact that the Appellant had signed the Addendum and that LEN’s hosting fee for the Rome Championships had been reduced was brought to the LEN and then to the FINA Executives’ attention. Whilst the LEN did not initiate a disciplinary procedure against the Appellant, FINA orders the conduct of investigation.

C. Proceedings before FINA Executive and FINA Ethics Panel

13. On 9 September, the FINA Executive referred this matter to the Ethics Panel for investigation and adjudication as per FINA Rules (the “Third Referral”).

14. In the Third Referral, the FINA Executive indicated that the Appellant may have allegedly violated several FINA Rules, namely the FINA Code of Ethics (“FEC”) and/or the FINA Constitution and/or any other FINA Rules. According to the Third Referral:

“on 10 May 2021, Mr. Barelli signed and addendum to the hosting contract for the 2022 LEN European Aquatics Championships to grant the Italian Swimming Federation a significant fee reduction (between EUR 500,00 and EUR 1,500,000 depending on certain conditions). Moreover, it was alleged that Mr. Barelli did not consult the LEN Bureau and LEN Treasurer prior to signing the addendum, even though he was required to do so pursuant to the LEN Constitution.

[…]

In light of the above, the FINA Executive, based on FINA Rule C 24.5, decided to refer this matter to the FINA Ethics Panel for investigation and adjudication as per FINA Rules. In particular, the FINA Executive

would request a determination on whether Mr. Barelli committed a violation of the FINA Code of Ethics and/or of the FINA Constitution, and/or any other FINA Rules.”

15. The Third Referral did not request the Ethics Panel to determine whether Mr. Barelli had breached the LEN Constitution, even though it did mention that he had not made some consultations required by the LEN Constitution.

16. On 27 October 2022, the Ethics Panel convened and conducted a hearing regarding the Third Referral and the Appellant’s written submissions.

17. On 8 November 2022, by virtue of the Third Referral Decision, the Ethics Panel ruled that the Appellant had breached certain rules.

18. The Third Referral Decision is somehow cryptic as to what exact FINA rules the Appellant had breached.

19. The findings of the Third Referral Decision expressly refers only to the Appellant's violating Article 11.3.2.3 and Article 11.5.1.5 of the LEN Constitution, neither of which was mentioned in the Third Referral. In the Third Referral Decision, the FINA Ethics Panel stated that:

“[…] as such [the Appellant] signed an addendum which benefited the Italian Federation without complying with the provisions of Article 11.3.2.3 as well as Article 11.5.1.5 of LEN Constitution, in regard to the signing of the addendum to the Hosting Contract for the 2022 LEN European Aquatic Championship.”

20. The findings in the Third Referral Decision do not directly refer to violating any FINA rules, including the FEC and the FINA Constitution.

21. The Third Referral Decision does, however, mention that:

“The FINA Ethics Hearing Panel is of the opinion that there is a clear conflict of interest as the Respondent was both the President of LEN and the Italian Swimming Federation, […]”

22. The operative part of the Third Referral Decision reads as follows:

“The FINA Ethics Hearing Panel unanimously, in applying the provisions of Article C.24.9(d) imposes “A ban for fixed period of one year from taking part in any Aquatic-related activities under the auspices of FINA or its members.” Such ban shall commence from the date of the expiry of the sanctions previously imposed by the FINA Ethics Hearing Panel on 2 November 2022 in respect of the Second Referral.”

III. PROCEEDINGS BEFORE THE COURT OF ARBITRATION FOR SPORT

23. On 18 November 2022, the Appellant filed with the CAS his Statement of Appeal against the Third Referral Decision pursuant to Article R47 of the Code of Sports- Related Arbitration (the “CAS Code”), appointing Prof. Massimo Coccia as arbitrator. In the Statement of Appeal, the Appellant requested that the Third Referral Decision be stayed (the “Request for Stay”) as well as the consolidation of the present procedure with the procedure CAS 2022/A/9296 Paolo Barelli v. FINA.

24. On 1 December 2022, the CAS Court Office acknowledged receipt of the Statement of Appeal on 18 November 2022, served its copy on the Respondent, which was, inter alia, invited to appoint a CAS arbitrator and to submit its observation on the requested stay and consolidation.

25. On 6 December 2022, FINA agreed with the requested consolidation. The CAS Court Office took note of this agreement on the same day. It specified that since two decisions were appealed, it would be for the Panel to decide the scope of the consolidation but that the Parties were authorized to submit one written submission for both cases.

26. On 9 December 2022, the Appellant filed his Appeal Brief pursuant to Article R51 of the CAS Code.

27. On 13 December 2022, the CAS Court Officer served a copy of the Appeal Brief on FINA, which was invited to submit its answer.

28. On 29 December 2022, FINA replied to the Request for Stay (the “Answer to the Request for Stay”) and nominated Mr Alexander McLin as arbitrator.

29. On 29 December 2022, the CAS Court Officer served a copy of FINA’s Answer to the Request for Stay on the Appellant.

30. Since Prof. Coccia made a disclosure, the Parties were informed accordingly on 10 January 2023. They were also duly reminded that, pursuant to Article R34 of the CAS Code, an arbitrator may be challenged within seven days after the grounds for the challenge had become known.

31. By communication dated 20 January 2023, the CAS Court Office informed the Parties, on behalf of the Deputy President of the CAS Appeals Arbitration Division, that the Panel had been constituted as follows: Prof. Eligiusz Krześniak, President of the Panel; Prof. Massimo Coccia and Mr. Alexander McLin, Arbitrators.

32. On 27 January 2023, the Respondent filed the Answer to the Appeal Brief pursuant to Article R55 of the CAS Code.

33. On 30 January 2023, the CAS Court Officer served a copy of FINA’s Answer on the Appellant.

34. On 31 January 2023, the Respondent informed the CAS Court Office of its preference for the issuance of an award based on the Parties’ written submissions, without the need of a hearing. On 2 February 2023, the Appellant shared this position.

35. On 3 February 2023, a disclosure statement from Mr. McLin was forwarded to the parties, which were reminded that a challenge could be brought within seven days. Pursuant to Article R57 of the CAS Code, the Respondent was further invited to submit a copy of its complete previous instance file and the Parties were informed that, in view of their agreement, they were authorized to address only one communication/submission for both the cases CAS 2022/A/9296 and CAS 2022/A/9297 but that since both appeals were directed against different decisions, two awards would be issued.

36. On 14 February 2023, the CAS Court Office noted that no challenge had been timely brought against Mr. McLin’s appointment.

37. On 17 February 2023, the Respondent submitted its complete case file, which was served on the Appellant on 21 February 2023.

38. On 16 March 2023, the CAS issued an order on the Appellant’s Request for a Stay. The CAS ordered that:

“The Request for a Stay of the Third Referral made by FINA Ethics Panel on 8 November 2022 filed by Mr Paolo Barelli in the arbitration CAS 2022/A/9297 Paolo Barelli v. FINA, is dismissed.”

39. On 20 March 2023, both Parties confirmed that they deemed that the holding of a hearing was unnecessary in this case.

40. On 4 April 2023, the Parties were informed that, pursuant to Article R57 of the CAS Code, no hearing would be held in this case and that, unless an objection that would be sent by 11 April 2023, it would be understood that the Parties did not request a case management conference either. The Parties were further invited to return a signed copy of the Order of Procedure.

41. The Parties returned a duly signed copy of the Order of Procedure on 5, respectively 11, April 2023.

42. On 11 May 2023, the Appellant submitted three new documents, the Decision n. 3/2023 issued on 3 May 2023 by the Italian Attorney General for Sports within the Italian Olympic Committee (CONI), the Decision sent on 8 May 2023 by the FIN Prosecutor to the FIN General Secretary and a press review dated 10 May 2023.

43. On 22 May 2023, the Respondent objected to their admission in the CAS file and, requested that, in the event these documents would nonetheless be admitted, it be granted a deadline to comment them.

44. On 25 May 2023, the Panel accepted the documents submitted by the Appellant on 11 May 2023 and invited the Respondent to provide their comments.

45. On 9 June 2023, the Respondent provided its comments to these documents.

IV. SUBMISSIONS OF THE PARTIES

46. This section of the Award does not exhaustively list the Parties’ contentions, its aim being to summarize the substance of the Parties’ main arguments. In considering and deciding upon the Parties’ claims in this Award, the Panel has accounted for and carefully considered all of the submissions made and evidence adduced by the Parties, including the allegations and arguments not mentioned in this section of the Award or in the discussion of the claims below.

A. The Appellant’s Position

47. The Appellant’s submissions, as presented in his Appeal Brief dated 9 December 2022 and in the submission dated 11 May 2023, may in essence be summarized as follows:

(a) The Appellant contested the Third Referral Decision issued by the FINA Ethics Panel on 8 November 2022, as it was fundamentally flawed and in breach of the law. The Appellant quoted one factual and several legal arguments.

(b) The factual argument refers to the underlying reasons behind signing the Addendum. While the Appellant does not contest having signed the Addendum, it maintains that the reason for doing so had been the need to ensure consistency and fairness vis-à-vis FIN. Elaborating on this argument, the Appellant noted that, in 2021, the LEN European Championships in Swimming, Diving, Artistic Swimming, Open Water and High Diving were to be held in Budapest (the “Budapest Championships”). On 22 March 2021, the Appellant received a letter from the chairman and the co-chairman of the Budapest Championships Organizing Committee. In it, the Organizing Committee asked LEN to reduce the costs and the fee due from the Organizing Committee for the right to stage the event. The rationale behind the request was that there had been unforeseen COVID-19-related circumstances looming over the Budapest Championships. LEN partially conceded. After the fee due from the Organizing Committee for holding of the Budapest Championships had been reduced, LEN undertook to apply the same rule to FIN with regard to the fee due from FIN for the right to stage the Rome Championships.

(c) The Appellant noted that not only did LEN not consider it appropriate to discipline the Appellant, but that the LEN President and Vice-President – in a letter sent after the event – even warmly thanked the Appellant and his collaborators for the hospitality and for organizing “at the highest standard” an excellent edition of the LEN European Championships.

(d) The Appellant then moved on to present several legal arguments.

(e) First, the Appellant argued that the Third Referral Decision was issued in violation of the Appellant’s right to be heard. According to the Appellant, during the proceedings before the Ethics Panel, the Appellant filed a letter dated 13 September 2022 in which it explained in detail why the Appellant's signing the Addendum could not qualify as a FEC violation. In that letter, the Appellant explained that:

“The Addendum established the conditions for a possible reduction of the agreed price, in relation to the limitations and impediments caused by the possible extension of COVID measures which would have impacted the organization and increased costs.

[…] The Addendum had become necessary as a matter of consistency and equality, indeed, during the same period (spring 2021), LEN decided to reduce the amount that the Hungarian Federation had to pay for the organization of the European Championship in Budapest […].”

The FINA Ethics Panel ignored the Appellant’s letter of 13 September 2022.

(f) Second, the Appellant emphasized that the Third Referral Decision violates its fundamental rights, because it was issued arbitrarily, which infringes on Article 9 of the Swiss Constitution.

(g) On that note, the Appellant pointed out that the LEN Regulations lack any conflict-of-interest provisions. The only provision which may apply is Article V.F.12 of FEC, which states that the FINA Ethics Panel may draw the Candidate’s or the Official’s attention to a potential conflict of interest. The FINA Ethics Panel never drew the Appellant’s attention to any potential conflict of interest during his nine-year mandate as FIN and LEN President, the capacities in which the Appellant served concurrently and signed all the other contracts between the FIN and the LEN, as LEN President.

(h) The Appellant believes that he was obliged to sign the Agreement and the Addendum under the LEN Regulations. The Appellant should not be sanctioned for having discharged his duties.

(i) Third, the Appellant states that the Third Referral Decision violates the nulla poena sine lege certa principle. According to the Appellant, the FEC conflict- of-interest provisions are ambiguous and inconsistent. Moreover, these provisions contradict the LEN Constitution, as well as LEN and FINA best practices. Pursuant to Article V.F.13 of FEC, Officials shall avoid any situations that could lead to a conflict of interest, such as being involved in the executive day-to-day running of a Continental/National federation of Aquatic sports. Nevertheless, FINA accepted the Appellant concurrently serving as President of LEN and FIN for ten years. FINA never let any doubts be known about such

a situation, in terms of any conflict of interest on the Appellant’s part. Summarizing the allegation, the Appellant pointed out that:

“it makes no doubt that the sanction decided by the FINA Ethics Hearing Panel does not comply with the principle nulla poena sine lege certa. None of the provisions relied on by the FINA Ethics Hearing Panel come within measurable distance of providing the clarity which sports disciplinary and ethics law requires as a precondition of punishment.”

(j) Fourth, the Appellant alleged that the Third Referral Decision violates the proportionality principle, because

“it fails to explain for what reason a warning or a reprimand was not considered.

The ban is the heaviest sanction in the catalogue. It cannot be an appropriate and balanced way to punish what was considered by FINA Ethics Hearing Panel as a conflict of interest.”

(k) Finally, in his submission dated 11 May 2023, the Appellant notified that the General Prosecutor for Sports appointed by the Italian Olympic Committee authorised the Prosecutor for the Italian Swimming Federation to drop all the charges held against the Appellant. They would both consider that Mr Barelli did not breach any ethical or disciplinary rules and that no sanctions were warranted against him. Although it is not entirely clear what the Appellant infers from the above fact in the context of the Third Referral Decision and the current proceedings, it seems that the Appellant intends to argue that there must be somewhat of a unified front between the Italian authorities and the FINA authorities since they should share the same interpretation of the Olympic value such as ethics. In other words, the Appellant seems to argue that if the Italian authorities drop the charges against him, the CAS Panel should follow suit.

48. In his Appeal Brief, the Appellant submitted the following requests for relief [verbatim transcription]:

“Pursuant to Articles R47 et seq. of the CAS Code, and for the reasons developed in this Appeal Brief and in the Statement of Appeal, Appellant requests that the Panel to be constituted in this case or the President if the Appeals Arbitration Division, at the case may be, issue an award:

[…]

Additionally

d. holding that the Appeal is admitted;

e. holding that the decision of the FINA Ethics Panel to ban the Appellant for a fixed period of one year from taking part in any Aquatic-related activities under the auspices of FINA or its member is annulled for violating utmost fundamental rights of the Appellant, together with FINA’s non-compliance with its internal regulations.

Subsidiarily

f. holding that the Appeal is admitted;

g. re-evaluating the situation thoroughly with all available evidence and most importantly with the defence of the Appellant in order to produce a sanction that is proportionate to circumstances of the case at hand;

In any event

h. ordering FINA to bear and reimburse the Appellant for all costs arising out of this appeal arbitration procedure before the CAS, including but not limited to legal and expert fees, arbitration costs and translation costs.”

B. The Respondent’s Position

49. The Respondent’s position, as presented in the Answer to the Appeal Brief dated 27 January 2023, may be summarized as follows:

(a) The Respondent stated that the Appellant had clearly violated Article V.F.14 of the 2017 FEC by concluding the Addendum and granting his own federation a significant host fee reduction. The Appellant, as the President of both LEN and FIN, should have refrained from participating in deciding to reduce the host fee due for FIN, while acting on behalf of LEN. However, the Appellant did otherwise. Summarizing its statement, the Respondent pointed that:

“[The Appellant] granted a fee reduction to the organization he presided – a textbook example of conflict of interest, which resulted in LEN substantially reducing its revenue and giving up marketing rights.”

(b) The Respondent argued that the Appellant violated Articles C.10.3.1.15 and C.11.6.2 of the 2020 LEN Constitution. The Respondent stated that the Appellant lacked the authority to decide such a significant reduction of the hosting fee due for FIN. Pursuant to Article C.10.3.1.15 of the LEN Constitution, such a reduction may only be granted by the LEN Bureau. Moreover, before granting such a reduction, the Appellant had to consult the LEN Treasurer,

pursuant to Article C.11.6.2 of the LEN Constitution. According to the Respondent, the Appellant had clearly violated both these provisions.

(c) The Respondent emphasized that the Appellant must be sanctioned under Article C.12.1.3 of the 2019 FINA Constitution, since it brought the sport of Aquatics into disrepute.

“the fact that the Appellant granted a fee reduction to his own federation for the LEN European Championships 2022 was reported extensively in the media and led to the public opinion of Aquatics being diminished.”

(d) The Respondent stated that it is within its rights to initiate proceedings against the Appellant and to sanction it for its conduct under Articles C.24.7 and C.24.9 of the FINA Constitution.

(e) The Respondent claims that the extent of the sanction is at its sole discretion. Moreover, in the case at hand and in light of the very serious 2017 FEC violations, the penalty imposed on the Appellant is not merely proportionate, but it is also highly necessary to uphold Aquatics’ image and reputation, and to protect its stakeholders.

(f) The Respondent contested the Appellant’s allegation of violating the nulla poena sine lege principle. According to the Respondent, the Appellant particularly violated Article V.F.14 of FEC. This violation is the basis for banning the Appellant.

(g) The Third Referral Decision was not issued in violation of the Appellant’s right to be heard. The information in the Appellant’s letter of 13 September 2022 was irrelevant to the case and did not justify the Appellant’s acts. The Respondent concludes its argument as follows:

“To conclude, to allege that the Addendum had become necessary as a matter of consistency and equality as Appellant states in his Appeal Brief is simply a further cheap attempt to justify the unjustifiable.”

(h) The Respondent also noted that the Third Referral Decision does not violate the Appellant’s fundamental rights, nor is it arbitrary. This is for several reasons.

(i) First, the Appellant was not simply fulfilling its obligations as LEN President. He was not even authorized to conclude the Addendum. The Appellant must have at least taken the matter up with the LEN Bureau and the LEN Treasurer, which never happened.

(j) Second, there is a difference between the Appellant’s signing of the Agreement and of the Addendum. Signing the Addendum only benefits the Appellant’s own national federation (FIN), which is clearly a conflict of interest.

(k) The sanction imposed on the Appellant is proportionate, given the Appellant’s grave violations. It is not the most severe sanction possible. A lighter sanction would have been insufficient.

(l) The Respondent finally noted that documents submitted by the Appellant on 11 May 2023 are irrelevant to establish the facts. The Respondent noted that they concern separate proceedings against the Appellant, initiated by the prosecutor of the Italian Swimming Federation while the current CAS proceedings refer to decisions of the FINA Ethics Panel. What is said, stated or done in another country and in other proceedings should have no impact on decisions of FINA Ethics Panel and on the current CAS proceedings.

50. In the Answer to the Appeal Brief, the Respondent submitted the following requests for relief for both the cases CAS 2022/A/9296 and CAS 2022/A/9297:

”On behalf of Respondent, the undersigned respectfully request this honourable CAS Panel:

1. To dismiss the Appeals and to confirm the Appealed Decisions;

2. To order Appellant to bear the arbitration costs in full;

3. To order Appellant to pay an amount of no less than CHF 10,000 as contribution to the legal fees incurred by Respondent.”

V. JURISDICTION OF THE CAS

51. Pursuant to Article 186(1) of the Swiss Private International Law (“PILA”), the CAS has the power to decide upon its own jurisdiction.

52. Article R47 of the CAS Code states that:

“An appeal against the decision of a federation, association or sports- related body may be filed with CAS if the statutes or regulations of the said body so provide or if the parties have concluded a specific arbitration agreement and if the Appellant has exhausted the legal remedies available to it prior to the appeal, in accordance with the statutes or regulations of that body.”

53. In this case, the Appellant relies on Article C.12.13.2 of the 2021 FINA Constitution. Article C.12.13.2 of the FINA Constitution and on Article 20.1 of the the FINA Ethics Panel Procedural Guidelines.

Article C.12.13.2 of the FINA Constitution provides that:

“A Member, member of a Member, or individual sanctioned by the Doping Panel, the Disciplinary Panel or the Ethics Panel may

appeal the decision exclusively to the Court of Arbitration for Sport (CAS), Lausanne Switzerland. [...]”

Article 20.1 of the the FINA Ethics Panel Procedural Guidelines provides that:

“A final decision issued by the Hearing Panel is subject to an appeal to the Court of Arbitration for Sport in accordance with art. C12.13.2 FINA Constitution”.

54. Neither Party questions the jurisdiction of the CAS in these proceedings and they both expressly recognizes it. Both Parties further signed the Order of Procedure.

55. As a result, the CAS has jurisdiction to hear and adjudicate the present case.

VI. ADMISSIBILITY OF THE APPEAL

56. Pursuant to Article R49 of the CAS Code:

“In the absence of a time limit set in the statutes or regulations of the federation, association or sports-related body concerned, or in a previous agreement, the time limit for appeal shall be twenty-one days from the receipt of the decision appealed against. The Division President shall not initiate a procedure if the statement of appeal is, on its face, late and shall so notify the person who filed the document. When a procedure is initiated, a party may request the Division President or the President of the Panel, if a Panel has been already constituted, to terminate it if the statement of appeal is late. The Division President or the President of the Panel renders her/his decision after considering any submission made by the other parties.”

57. The FINA Constitution and the FINA Ethics Panel Procedural Guidelines are silent regarding a time limit for appealing against decisions issued by the FINA Ethics Panel. Therefore, the default 21-day deadline provided for in the above Article R49 of the CAS Code applies.

58. The Third Referral Decision was issued on 8 November 2022 and the Appellant filed its Statement of Appeal on 18 November 2022.

59. Therefore, the Appeal is admissible.

VII. APPLICABLE LAW

60. Article R58 CAS Code provides as follows:

“The Panel shall decide the dispute according to the applicable regulations and, subsidiarily, to the rules of law chosen by the parties or, in the absence of such a choice,

according to the law of the country in which the federation, association or sports-related body which has issued the challenged decision is domiciled or according to the rules of law that the Panel deems appropriate. In the latter case, the Panel shall give reasons for its decision.”

61. Since FINA has its seat in Switzerland, the Panel deems the applicable regulations are the Statutes and various regulations of FINA, and subsidiarily Swiss law.

VIII. MERITS

62. In order to resolve the present matter, the Panel was faced with the following questions:

1. Can the alleged violation of the Appellant’s right to be heard be the sole prerequisite for repealing the Third Referral Decision?

2. Did signing the Addendum breach any rules of the LEN Constitution and, if so, which ones?

3. Did signing the Addendum breach any FINA rules and, if so, which ones?

4. Did the Third Referral Decision correctly identify and indicate rules which have been allegedly breached by the Appellant?

5. If, having duly analyzed the case material, the Panel finds that the Appellant had breached the conflict-of-interest rules, is the extent of the sanction commensurate?

Ad. 1. Can the alleged violation of the Appellant’s right to be heard be the sole prerequisite for repealing the Third Referral Decision?

63. Even assuming that the Appellant’s right to be heard was violated in the proceedings before the FINA Ethics Panel, it cannot be the sole prerequisite for repealing the Third Referral Decision.

64. The Panel emphasizes that it examines the law and the facts of the case de novo, as empowered by Article R57 of the CAS Code.

65. Article R57 of the CAS Code provides that:

“The Panel has full power to review the facts and the law. It may issue a new decision which replaces the decision challenged or annul the decision and refer the case back to the previous instance”.

66. As follows from well-established CAS case law, procedural defects before lower instances (i.e. before the FINA Ethics Panel) can be cured through a de novo hearing before CAS (see. CAS 2016/A/4704 para. 78, CAS 2015/A/4162 paras. 70 et seq., CAS 2014/A/3848 paras. 53 et seq.). The virtue of a de novo hearing is that any procedural

irregularities in the bodies that had issued the appealed decision “fade to the periphery” (see CAS 2015/A/4162 para. 70).

67. Therefore, any procedural defects before the FINA Ethics Panel can be cured by the present CAS proceedings and, as such, these defects alone cannot serve as an independent basis for repealing the Third Referral Decision.

Ad 2. Did signing the Addendum breach any rules of the LEN Constitution and, if so, which ones?

68. As a starting point the Panel notes that the Third Referral did not allege that the Appellant had in any way breached the LEN Constitution. For this reason alone, the defense of the Appellant in the period prior to filing an appeal with CAS might not have focused on arguments regarding the interpretation of the LEN Constitution and its consequences for the Appellant. The finding of the FINA Ethics Panel in the Third Referral Decision that the Appellant has breached some of the LEN rules is therefore surprising and may give rise to certain purely procedural objections.

69. Moreover, one may doubt whether FINA has a jurisdiction to sanction a violation of the LEN rules per se.

70. Leaving the above arguments aside for a moment, the Panel nevertheless reviewed the LEN Constitution to evaluate whether the Appellant could be accused of violating any of those rules.

71. LEN is an association, established for an indefinite period, under Article 60 et seq. of the Swiss Civil Code. LEN is a self-governing, independent, not-for-profit organization.

72. The key rules regarding LEN’s legal status and headquarters, objectives, activities, membership, finances and organizational structure can be found in the LEN Constitutional Rules (LEN Constitution), updated in November 2020.

73. Section 11 of the LEN Constitution lists the roles and duties of principal officials: the President, the General Secretary and the Treasurer.

74. The Third Referral Decision indicates that the Appellant has violated two of those rules – Article 11.3.2.3 and Article 11.5.1.5.

75. The Panel finds it difficult to discern a breach by the Appellant of these provisions. Both norms referred to and indicated in the Third Referral Decision specify LEN officials’ duties generally, rather than instructing them to act in any particular fashion.

76. Article 11.3.2.3 provides that the LEN President must “negotiate or […] oversee the negotiations of all major contracts on behalf of LEN, in consultation with the members of the Bureau Executive and the LEN Executive Director”. The above provision does not expressly state which contracts are “major”, nor does it specify the manner of holding such consultations (for instance, whether oral consultation sufficient, or whether written approval necessary).

77. Article 11.5.1.5. is even more general. It merely refers to the Treasurer’s obligation to “participate in the negotiations with official suppliers and in relation to TV and broadcasting rights”. However, it does not follow from the above provision, whether the Treasurer must participate in negotiations with all suppliers; nor does it specify the capacity in which the Treasurer is to participate in such negotiations (observer, representative, or otherwise).

78. Irrespective of the procedural argument mentioned above, the Panel finds that neither Article 11.3.2.3, nor Article 11.5.1.5 of the LEN Constitution are sufficiently unambiguous to be the sole grounds for holding the Appellant accountable for signing the Addendum.

79. The Panel further notes – much to its surprise – that in its Answer, the Respondent did not focus on the alleged violation of Article 11.3.2.3 nor of Article 11.5.1.5, but rather on the alleged violation of Articles C.10.3.1.15 and C.11.6.2 of the 2020 version of the LEN Constitution.

80. To begin with, the Panel believes that the Respondent meant to refer in its Answer to the Appeal Brief to Article C.11.5.2, and not to Article C.11.6.2, Article C.11.6.2 simply does not exist in the 2020 version of the LEN Constitution.

81. Leaving the above obvious mistake aside for a moment, any reference to the alleged violation of Articles C.10.3.1.15 and C.11.5.2 should also be dismissed. There are at least two reasons for that.

82. First, the Third Referral did not allege that the Appellant had in any way breached the LEN Constitution and one may doubt whether FINA has jurisdiction to sanction a violation of the LEN rules per se. As stated above, therefore, for procedural reasons alone, an objection can be made against arguing that the Appellant should be found liable for breaching any provisions of the LEN Constitution.

83. Second, the Panel believes that, also on the merits, one cannot find the Appellant liable for breaching Article C.10.3.1.15 and C.11.5.2 of the 2020 version of the LEN Constitution. This is for the following reasons.

84. Article C.10.3.1.15 simply says that the rights and duties of the Bureau (meaning all members of the LEN Bureau, elected or serving in accordance with Article C.10) cover reducing or waiving fines and/or fees if there is a reason. This norm does not define “fees”, nor does say anything about anyone breaching it. Hence, this norm (Article C.10.3.1.15 of the 2020 version of the LEN Constitution) is not sufficiently unambiguous to be the sole grounds for holding the Appellant accountable for signing the Addendum.

85. Also, the Appellant’s alleged violation of Article C.11.5.2 is not justified. This norm only says that the Treasurer shall be mandatorily consulted on all financial matters. It neither says anything about how often such consultation should take place (i.e. shall it be on a case-by-case basis, regularly – weekly, monthly, etc.), nor does it specify any

special form in which such consultation shall take place, or what the consequences of non-compliance are and who can violate it. The Panel believes, therefore, that also this norm is not sufficiently unambiguous to be the sole grounds for holding the Appellant accountable for signing the Addendum.

Ad 3. Did signing the Addendum breach any of the FINA rules, and if so - which ones?

86. The Panel has considered two FINA rules, which could – theoretically – be taken into consideration when determining whether the Appellant has violated the conflict of interest principles when signing the Addendum.

87. The first rule is specified in the FINA Constitution. In its Answer, the Respondent alleged the violation of Article C.12.1.13 of the 2019 FINA Constitution. Under Article C.12.1.3, any national federation, member of a national federation or individual member of a national federation of FINA can be sanctioned for “bringing the Aquatics sport into disrepute”.

88. With respect to the above allegation, the Panel notes that the Appellant was not found liable of violating the Article C.12.1.3 of the FINA Constitution in the first instance proceedings. For this reason alone, the Panel believes that any claims aimed at finding the Appellant guilty of bringing the sport into disrepute in these CAS proceedings are not justified.

89. Moreover, even leaving this procedural argument aside, the Panel fails to see how the signing of the Addendum might have brought the acquits sport “into disrepute”, i.e., damage its reputation. The Panel is aware of an article, produced by the Respondent, mentioning this fact but even that article merely mentions this issue. It was not uncommon during the Covid-19 pandemic to modify contractual terms in most areas of business life – including sports– to reflect the changing market conditions and to adapt to the new regulatory frameworks.

90. The Panel does, however, agree that the Appellant breached the second rule - Article V.F.14 of the FEC. The Panel finds that the Appellant’s conduct exemplifies the existence of a conflict of interest. The Appellant should have recused himself from signing Addendum on behalf of LEN.

91. As follows from Article V.F.14 of the FEC, officials should perform their duties avoiding any existing or potential conflict of interest. If an official has doubts whether there is a conflict of interest, it may submit the matter to the FINA Ethics Panel. Article V.F.14 of the FEC provides that:

“Officials shall not perform their duties in matters with an existing or potential conflict of interest. Should a conflict of interest, or the appearance of a conflict of interests, arise, or if there is a danger of such conflict arising, the individual concerned must refrain from taking any further part in the handling of the matter. If it is unclear

whether such a conflict of interests exists in any given situation, the matter may be submitted to the Ethics Panel”.

92. The Appellant believes that the Third Referral Decision violated the nulla poena sine lege certa principle. The Panel does not agree with this position. Rules on conflict of interest have been adopted and published and they are – in the opinion of the Panel - quite clear in singling out conflicts of interest (or even mere appearance thereof) as a something that must be avoided by officials (see CAS cases 2016/A/4871 and CAS 2017/A/5006).

93. While reducing the hosting fee for FIN, the Appellant was serving as president of both FIN and LEN. Hence, virtually any decision on behalf of LEN with respect to FIN entailed a conflict of interests for the Appellant, given his dual roles.

94. The fact that Mr. Antonello Panza, rather than the Appellant, signed the Addendum on behalf of FIN does not avoid the conflict. The Appellant did sign the Addendum on behalf of LEN, allowing FIN (an organization he chairs) to have its financial obligations toward LEN significantly reduced. This automatically means that LEN (represented by the Appellant) received less money than LEN would have otherwise received if the Addendum had not been signed.

95. Similarly, the Panel rejects the view that opinion of Italian authorities should somehow impact this Panel’s interpretation of FINA rules. The Panel is aware that the Attorney General for Sports appointed by the Italian Olympic Committee authorised the Prosecutor for the Italian Swimming Federation to drop all the charges held against the Appellant and that they would both consider that he did not breach any ethical or disciplinary rules and that the sanctions imposed against him were not justified. Yet it is obvious for this Panel that what is said, stated or done in other proceedings and under a different regulatory framework does not bind the FINA Ethics Panel or a CAS panel.

96. In the Panel’s view, the Appellant, as president of both LEN and FIN, should have refrained from participating in the decision whether a hosting fee reduction should have been granted to FIN or – at the very least – submitted the matter to the FINA Ethics Panel for consultation. Since the Appellant failed to do both, the Panel finds that the Appellant violated Article V.F.14 of the FEC.

Ad 4. Did the Third Referral Decision correctly identify and indicate rules which have been allegedly breached by the Appellant?

97. The following sentence in the Third Referral Decision, featured in Clause 4.3. is of key importance. It reads as follows:

“The FINA Ethics Hearing Panel is of the opinion that there is a clear conflict of interest as the Respondent was both the President of LEN and the Italian Swimming Federation, and as such signed an addendum which benefited the Italian Federation without complying with the provisions of Article 11.3.2.3 as well as Article 11.5.1.5 of LEN

Constitution, in regard to the signing of the addendum to the Hosting Contract for the 2022 LEN European Aquatic Championship”.

98. The Panel believes that there can be at least three avenues of construing the above passage from the Third Referral Decision.

99. First, the passage may mean that the FINA Ethics Panel had found the Appellant guilty of breaching only the expressly named LEN rules, i.e. the indicated provisions of the LEN Constitution, without referring to any FINA rules.

100. Second, the passage may be construed such that the second part of the sentence – “without complying with the provisions of Article 11.3.2.3 as well as Article 11.5.1.5 [recte: 11.6.1.5] of LEN Constitution” – determines that the Appellant had breached the conflict-of-interest rules referred to in the FINA rules (as it does in the first part of the sentence in Clause 4.3. of the Third Referral Decision – “there is a clear conflict of interest […]”. In other words, breaching the conflict-of-interest rules, referred to in the FINA rules, has arisen from and has been caused by failure to follow the consultation procedure, referred to in the LEN Constitution.

101. Third and finally, the above passage from the Third Referral Decision may be construed as an indication of two breaches - irrespective of each other, albeit “triggered” by one and the same action, i.e. the Appellant signing the Addendum. The first, breaching the conflict-of-interest rules (referred to in the FINA rules); the second, failure to follow the consultation requirements (referred to in the LEN Constitution).

102. The Panel will begin analyzing this issue by disregarding the second avenue of construing the pertinent passage from the Third Referral Decision. One can hardly accept that the rules laid down in the FINA documents should be interpreted based on the rules featured in the documents originating with a different institution - LEN, in the present matter. Such an understanding of the above passage from the Third Referral Decision would, therefore, be legally and logically incorrect, and - if only for that last reason - it should not be deemed to reflect the Ethics Hearing Panel’s intentions.

103. This leaves the Panel with the choice between the first and the third avenue when construing the analyzed passage.

104. The Panel also disregards the first possible interpretation of Clause 4.3. of the Third Referral Decision for the following reasons. While the passage only lists, expressis verbis, the violation of Article 11.3.2.3 and of Article 11.5.1.5 of the LEN Constitution, the first part of that sentence expressly states that the Applicant had been acting amid a conflict of interest. However, the LEN Constitution provisions cited are silent on the issue of conflicts of interest.

105. As a result, only the third interpretation of the pertinent passage of the Third Referral Decision can be correct.

106. This, in turn, leads the Panel to conclude that the Third Referral Decision holds the Appellant in breach of both the FINA (in particular Article V.F.14 of the FEC) and LEN rules. Therefore, while the Panel doubts whether the Appellant may be held liable for breaching the LEN Constitution (for the reasons addressed in greater detail above), the unequivocal indication - in the concluding part of the Third Referral Decision - to the Appellant also having breached the conflict of interest rules ought to be construed - in the light of all the available evidence - as these being the applicable FINA rules.

107. The Third Referral Decision should, therefore, be considered correct in this regard.

Ad 5. If, having duly analyzed the case material, the Panel finds that the Appellant had breached the conflict of interest rule is the extent of the sanction commensurate?

108. According to well-established CAS jurisprudence, CAS panels should exert self- restraint in reviewing the level of a sanction imposed by a first instance disciplinary body (cf. CAS 2017/A/5086 at para. 206, CAS 2015/A/3875 at para. 108, CAS 2012/A/2824 at para. 127, CAS 2012/A/2702 at para. 160, CAS 2012/A/2762 at para. 122, CAS 2009/A/1817 & 1844 at para. 174, CAS 2007/A/1217 at para. 12.4) and should reassess sanctions only if they are evidently and grossly disproportionate to the offence or if a different conclusion is reached on the substantive merits of the case than did the first instance body (cf. CAS 2017/A/5086 at para. 206, CAS 2009/A/1817 & 1844 at para. 174 with references to further CAS case law, CAS 2012/A/2762 at para. 122, CAS 2013/A/3256 at paras. 572-572, CAS 2016/A/4643 at para. 100). CAS jurisprudence also specifies that, far from excluding or limiting the power of a CAS panel to review de novo the facts and the law of the dispute at hand (pursuant to Article R57 of the CAS Code), such indication only means that a CAS panel would tend to pay respect to a fully reasoned decision and would not easily “tinker” with a well-reasoned sanction, not considering it proper to just slightly adjust the measure of the sanction (cf. CAS 2015/A/3875 at para. 109, CAS 2011/A/2645 at para. 94, CAS 2011/A/2515 at paras. 66-68; CAS 2011/A/2518 at para. 10.7, CAS 2010/A/2283 at para. 14.36).

109. In the present matter, the Panel fails to find any explanation at all in the Appealed Decision as to why the Ethics Panel deemed it appropriate to impose “in applying the provisions of Article C.24.9 (d) [a] ban for a fixed period of one year from taking part in any Aquatic-related activities under the auspices of FINA or its members”. The Panel must thus provide its own reasons in assessing the appropriate measure of the sanction in accordance with the principle of proportionality.

110. The Panel notes that Article C 24.9 of the applicable version of the 2019 FINA Constitution provides the following list of applicable sanctions: “a) a warning or reprimand; b) a suspension for a fixed period of up to four (4) years from holding office or other position held by an Official and/or until a specified set of conditions have been met to the satisfaction of the Ethics Panel;

c) a return of any FINA award; d) a ban for a fixed period of up to a lifetime from taking part in any Aquatics related activity; e) a recommendation to the Executive of the notification of the matter to the appropriate law enforcement authorities.”

111. With respect to the factors to take into account in determining a sanction, the Panel finds the reasoning of the Panel in CAS 2019/A/6219 (and in CAS 2019/A/6344) helpful: “The applicable regulations give the hearing body a wide discretion in deciding the kind and measure of the sanction. The Panel finds, however, that some criteria must be adopted to guide the exercise of such discretion. In the Panel’s opinion, therefore, when imposing a sanction, account has to be taken […] of the following relevant factors: • the nature of the violation; • the impact of the violation on the public opinion; • the importance of the competition affected by the violation; • the damage caused to the image of FIFA and/or other football organizations; • the substantial interest of FIFA, or of the sporting system in general, in deterring similar misconduct; • the offender’s assistance to and cooperation with the investigation; • the circumstances of the violation; • whether the violation consisted in an isolated or in repeated action(s); • the existence of any precedents; • the value of the gift or other advantage received as a part of the offence; • whether the person mitigated his guilt by returning the advantage received, where applicable; • whether the offender acted alone or involved other individuals in, or for the purposes of, his misconduct; • the position of the offender within the sports organization; • the motives of the violation; • the degree of the offender’s guilt; • the education of the offender; • the personality of the offender and its evolution since the violation; • the extent to which the offender accepts responsibility and/or expresses regret”.

112. In sum, general considerations to weigh in the assessment of the proportionality of a sanction thus include (i) severity (the gravity of the illegal act committed), (ii) deterrence (the potential of the sanction to dissuade repeated illicit conduct of the same

nature), and (iii) the importance of the rule being protected. (CAS 2019/A/6432 at para. 250 et seq.).

113. The FEC, which has been in effect since late 2014 and was the subject of revisions in 2017 and 2021, contains rather thorough provisions on integrity (Art. V.D.) and conflicts of interest (Art. V.F.). The latter constitute roughly a quarter of the length of the FEC and spell out not only problematic situations constituting self-dealing, but also emphasize the importance of avoiding appearances of conflict. In the event of doubt, the possibility of consulting the Ethics Panel is highlighted, and the mere failure to declare a situation of potential conflict is a single out as problematic in and of itself. Article V.F.16 of the FEC provides that:

“If an Official neglects to declare a situation of a potential conflict of interest, the FINA President or one of the FINA Executive members may refer the matter to the Ethics Panel.”

114. The extent to which these considerations of conflicts of interest feature prominently in the FEC is an indicator of their importance, which is clearly substantial. Its drafters recognized the risks inherent in sport governance, particularly at the international level, where governing boards include elected leaders of national and continental bodies. Such situations are common by virtue of their federal structure, but also create situations rife with potential to favor particular commercial actors. Indeed, as stated by another CAS panel, “the standards of conduct required of officials of an international federation […] must be of the highest level because the public must perceive sports organizations as being upright and trustworthy, in order for those organizations to legitimately keep governing over their sports worldwide” (CAS 2017/A/5086 at para. 154).

115. The severity of the breach of this provision is also far from innocuous, given the fact that not only was a conflict not disclosed, it did not lead the Appellant to recuse himself from a transaction between two entities he was representing at their highest level. It was not necessary for the Appellant to have a personal financial stake in the transaction nor to have caused some harm to FINA or LEN (as stated in CAS 2017/A/5003 at para. 227: “Lack of harm does not evidence the non-existence of conflict of interest. What matters in determining conflict of interest is whether the individual was in a position or appeared to be in a position to disadvantage his principal to the benefit of someone else”); similary in the case CAS 2016/A/4871 the Panel noted that “To find a violation of the […] Code of Ethics it is sufficient if an official has directly or indirectly (i) acted in a way that is no longer inspiring the “necessary confidence” or (ii) if he has “in other ways become unworthy of trust”. The existence of damages is not necessary”.

116. The Panel notes that the sanction meted out on the Appellant, while more significant than a warning or reprimand, was also not the most severe, considering that a one-year suspension is nowhere near a lifetime ban. This indicates a balanced (or, at least, non- arbitrary) approach by the Ethics Panel, who were apparently seeking to deter future misconduct with a meaningful, but not excessive, penalty.

117. The Panel notes further that the Appealed Decision found that the Appellant had breached both the LEN Constitution and the FINA rules.

118. According to Article C 24.9 (b) of the applicable version of the FINA Constitution the penalty may include a suspension for a fixed period of up to four (4) years from holding office or other position held by an Official and according to Article C 24.9 (d) a ban for a fixed period of up to a lifetime from taking part in any Aquatics related activity.

119. According to Article C 16.2.3 of the applicable version of the LEN Constitution the penalty may include a suspension for a fixed period.

120. This Panel came to the conclusion that the Appellant only breached the FINA rules. The Panel notes further that the violation of FEC in itself can lead to a lifetime suspension (at least the one which is punishable under Article C 24.9 (d)) and a violation of LEN Constitution can lead to a suspension for an unspecified period (thus possibly also for a life time). Since in the case of several violated provisions only one sanction can be recognized and the overall sanction is to be determined according to the most severe sanction, it is irrelevant for the duration of the suspension whether LEN Constitution was violated or not. The fact that this Panel rejects the violation of LEN Constitution by the Appellant does not by itself lead to the disproportionality of the sanction.

121. The Panel considers the following circumstances and factors, which weigh in the Appellant’s favor: (i) the LEN (the organization in a position to claim damage as a result of the conflict of interest, essentially approved and ratified the Appellant’s conduct by not starting any disciplinary proceedings, and by even thanking and congratulating him in relation to the event for which the Addendum was signed; (ii) the constant practice of the previous years of both FINA and LEN in not taking (or at least raising the) issue with the Appellant’s conflict of interest, which – as noted in CAS 2020/A/7008, par. 57 – might affect the assessment of the sanction (see also CAS 2017/A/5356, par. 92; yet the Panel also takes note of the reasoning in CAS 2016/A/4871, where the Panel determined that while “there may have been other instances of conflict of interest in the past that, unlike the present incident, remained undiscovered and unpunished; nonetheless, even admitting such “practice”, this does not grant a “license” for conflict of interest to pervade in the future”); (iii) the fact that a similar benefit to that of the Addendum was granted to another national federation on the occasion of the previous edition of the same event, (iv) the impact of the violation on the public opinion must have been – in the opinion of the Panel – limited, if any, since it was common practice during the Covid-19 pandemic to modify contractual terms in virtually every area of business life to reflect the constantly changing conditions on the markets and to adapt to new regulatory frameworks; and, for the same reasons, (v) damage caused to the image of FINA must have been small, if any. On balance, and in light of the fact that the one-year suspension is not grossly disproportionate to the offense when taking into account the totality of the circumstances above, the Panel refrains from further reassessment of the sanction, a one- year ban from taking part in any Aquatic-related activities under the auspices of FINA or its members.

IX. COSTS

(…)

ON THESE GROUNDS The Court of Arbitration for Sport rules that:

1. The appeal filed on 18 November 2022 by Mr Paolo Barelli against the decision of the FINA Ethics Panel rendered on 8 November 2022 is dismissed.

2. The decision issued on 8 November 2022 by the FINA Ethics Panel is upheld.

3. (…).

4. (…).

5. All other and further motions or prayers for relief are dismissed.

Seat of arbitration: Lausanne, Switzerland Date: 15 September 2023

COURT OF ARBITRATION FOR SPORT

Eligiusz Krześniak President of the Panel

Alexander McLin Massimo Coccia Arbitrator Arbitrator