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Mastercard International Incorporated v. Fédération Internationale De Football Association

February 28, 2007

MASTERCARD INTERNATIONAL INCORPORATED, PLAINTIFF,
v.
FÉDÉRATION INTERNATIONALE DE FOOTBALL ASSOCIATION, DEFENDANT.



The opinion of the court was delivered by: Loretta A. Preska, U.S.D.J.

OPINION AND ORDER

FIFA's latest actions demonstrate that it still does not govern itself by its slogan, "fair play." It has vigorously litigated MasterCard's request for injunctive relief in this Court and has lost, fair and square. Instead of observing the rules of the game and proceeding solely to appeal the judgment entered in this Court, it has, at the same time, sought a do-over with a different referee -- an arbitral tribunal in Switzerland. Even after judgment has been entered and with the appeal proceeding, FIFA continues to request that the arbitral referee undo each ruling of this Court --- a course of action our courts have recognized as the antithesis of fair play. MasterCard now seeks an anti-suit injunction to prevent a do-over with this different referee, and, for the reasons set forth below, it is granted.

BACKGROUND

Plaintiff MasterCard International Incorporated ("MasterCard") brings this motion seeking an order permanently enjoining Defendant Fédération Internationale de Football Association ("FIFA") from pursuing its Complaint, and directing it to withdraw its Notice of Arbitration, in the arbitration now pending before the Zurich Chamber of Commerce ("Arbitration Tribunal"), SCA No. 600070-2006. FIFA opposes this motion for an anti-suit injunction and seeks to continue to pursue action before the Arbitration Tribunal in Switzerland.

Action in the Southern District of New York

The original action was commenced on April 20, 2006, when MasterCard filed a Summons and Complaint alleging that FIFA materially breached MasterCard's first right to acquire post-2006 sponsorship rights contained in Section 9.2 of the Official FIFA Partner Agreement between FIFA and MasterCard made as of November 26, 2002 (the "2002-06 Agreement"), which Agreement granted MasterCard sponsorship rights with respect to the FIFA World Cup and other FIFA competitions during the 2003 to 2006 time period. (Declaration of Martin S. Hyman, Esq., executed January 25, 2007, (the "Hyman Decl."), Ex. 1, MasterCard Complaint, filed April 20, 2006, ("MasterCard Complaint")). In its Complaint, MasterCard requested both preliminary and permanent injunctive relief: (i) enjoining FIFA from performing under a purported sponsorship agreement with VISA or any other "financial services" partner other than MasterCard during the period January 1, 2007 to December 21, 2014; and (ii) directing FIFA to specifically perform its obligation, under Section 9.2, to grant to MasterCard the package of advertising and sponsorship rights reflected in a 96-page written sponsorship [agreement] offer for the 2007-2014 time period that was delivered to and accepted by, MasterCard, in March 2006. (MasterCard Complaint).

On June 15, 2006, MasterCard filed a motion for preliminary injunction seeking the preliminary relief described above. (Dkt. no. 6). FIFA moved to dismiss MasterCard's complaint on jurisdictional grounds. (Dkt. no. 20). It also moved to compel arbitration on the basis that the matters in the suit before this Court fit within the broad language of the parties' arbitration provision, Section 22 of the 2002-06 Agreement, and that the ultimate merits of the parties' dispute should be resolved exclusively through arbitration in Switzerland. (Dkt. no. 20). FIFA's motion to dismiss for lack of personal jurisdiction was denied from the bench on July 20, 2006, and a written Opinion and Order was issued dated August 10, 2006. (Dkt. nos. 46, 48). FIFA's motion to compel arbitration was denied by a decision read into the record on July 27, 2006. (Dkt. no. 46)(Hyman Decl., Ex. 2, Transcript of the Decision, dated July 27, 2006, (the "Decision")). In the Decision, the Court determined, as a threshold matter, that "it is the Court [and not the arbitrators] that must decide whether this dispute is subject to arbitration." (Id. at p.4). The Court examined the Swiss law presented by both sides as well as the arbitration provision in the 2002-06 Agreement (that provided for a non-breaching party to seek "any and all equitable relief including an injunction" in a court of competent jurisdiction (2002-06 Agreement, ¶ 22)) and determined that the Court could decide the ultimate merits of the non-breaching party's claim for equitable relief, including permanent (as opposed to temporary) equitable relief, (id. at pp. 4-10).

On September 25, 2006, the trial on the merits was consolidated with the preliminary injunction hearing. (Dkt. no. 54). The preliminary injunction hearing and trial on the merits were held on November 28 through December 1, 2006, during which the Court received evidence and heard testimony from live witnesses.

On December 6, 2006, this Court issued its Findings of Fact and Conclusions of Law, amended the following day on December 7, 2006. (Hyman Decl., Ex. 3, Amended Findings of Fact and Conclusions of Law, dated December 7, 2006, ("Amended Findings and Conclusions")). The Court concluded that FIFA had materially breached Section 9.2 of the 2002-06 Agreement by "not granting the package of post-2006 rights offered to, and accepted by, MasterCard at FIFA's asking price and instead purporting to grant them to VISA." (Amended Findings and Conclusions, at ¶ 100 of Conclusions of Law).*fn1 The Court also determined that "FIFA's conduct in performing its obligations under Section 9.2 and in its negotiations relating to the sponsorship rights covered by that section breached the obligation of good faith imposed by Swiss law, and thus FIFA breached the [2002-06] Agreement." (Id. at ¶ 101 of Conclusions of Law). In addition, the Court found that "independently of the foregoing breaches, FIFA has breached section 9.2 of the 2002-06 Agreement by granting to VISA rights that are not 'on comparable terms' to those offered to MasterCard". (Id. at ¶ 102 of Conclusions of Law). The Court determined that an injunction was appropriate because "in the absence of an injunction, MasterCard would suffer . . . irreparable harm." (Id., at ¶¶ 13, 21 of Conclusions of Law) ("MasterCard's loss of the next World Cup Sponsorship would be, in its now-famous words, 'Priceless.'"). Finally, in accordance with Section 22 of the 2002-06 Agreement, the Court found that MasterCard was entitled to its "costs and expenses in connection with its enforcement of its rights including all reasonable legal fees, costs and disbursements." (Id. at ¶ 121(c) of Conclusions of Law).

Accordingly, judgment was entered on December 8, 2006 (Dkt. no. 79)(the "Judgment"), stating that it is hereby:

ORDERED that FIFA is permanently enjoined from implementing or otherwise proceeding with its purported 2007-14 "FIFA World Cup" sponsorship agreement with VISA or otherwise granting to VISA, or any entity other than MasterCard, any package of advertising and sponsorship rights, with respect to payments solutions or financial services products or services, in connection with FIFA competitions during the period 2007 to 2014; and it is further

ORDERED that FIFA shall specifically perform its obligations to MasterCard under section 9.2 of the [2002-06 Agreement], by granting to MasterCard the package of advertising and sponsorship rights, which previously was offered to and accepted by MasterCard, with respect to payment solutions products or services, in connection with FIFA competitions during the period 2007-2014, on the terms and conditions set out in the 2007-14 sponsorship agreement delivered by FIFA to MasterCard on March 3, 2006 to execute and that MasterCard did execute; and it is further

ORDERED that, in accordance with section 22 of the 2002-06 Agreement, FIFA shall pay to MasterCard all of MasterCard's "costs and expenses in connection with its enforcement of its rights, including all reasonable legal fees, costs, and disbursements." The amount of those costs and expenses shall be determined following the conclusion of any appellate proceedings or after FIFA's time to appeal has expired. (Judgment).

On December 12, 2006, FIFA timely filed a notice of appeal from the Judgment challenging, inter alia, the Court's decision to determine arbitrability; the denial of FIFA's motion to compel arbitration; and issuance of a permanent injunction on the merits. (Declaration of T. Barry Kingham, Esq., executed on February 9, 2007, ("Kingham Decl."), Ex. B, FIFA's Opening Appellate Brief). On December 21, 2006, the parties entered into a post-judgment Stipulation and Order which, inter alia, stayed pending appeal that portion of the Judgment that compelled FIFA to grant to MasterCard the post-2006 sponsorship rights on the terms and conditions set out in an agreement presented to MasterCard on March 3, 2006. (Hyman Decl., Ex. 6, Stipulation and Order, dated December 21, 2006, ("Stipulation and Order")). FIFA's appeal has been granted expedited treatment (one of the conditions of the stay) and tentatively has been set down for argument during the week of March 19, 2007. On January 26, 2007, MasterCard filed the instant motion to enjoin FIFA from proceeding with the arbitration in Switzerland.

Arbitration Before the Zurich Chamber of Commerce Arbitral Tribunal While the Court was considering FIFA's motions, FIFA formally commenced arbitration by filing a Notice of Arbitration with the Zurich Chamber of Commerce's Arbitral Tribunal on June 21, 2006. In its Notice, FIFA requested that its dispute with MasterCard be ...


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