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Court may let FIFA-MasterCard dispute go to Swiss arbitrators

Court may let FIFA-MasterCard dispute go to Swiss arbitrators

A contract dispute over whether MasterCard or Visa sponsors the next two World Cup soccer tournaments may be decided or at least influenced by an arbitration panel in Switzerland, a federal appeals panel indicated Wednesday.
The three-judge panel of the 2nd U.S. Circuit Court of Appeals reserved ruling on the case after hearing oral arguments, but at least two of the three judges said the arbitration panel in Zurich, Switzerland, may be entitled to decide some aspects of the dispute.
U.S. District Judge Loretta Preska earlier this year had blocked the Swiss arbitration panel from immediately hearing the case after she awarded MasterCard sponsorship of the next two World Cup soccer tournaments.
Soccer's governing body, the Federation Internationale de Football Association, known as FIFA, had filed a lawsuit with the arbitration panel asking it to consider the dispute.
The filing of the lawsuit came after Preska ruled in December that MasterCard International Inc. can sponsor the next two World Cups, in 2010 and 2014, because FIFA did not honor its agreements with the company when it awarded the rights to Visa International Inc.
Preska said MasterCard, which is based in Purchase, N.Y., and is the nation's second-largest credit card brand behind Visa, had a right of first refusal after sponsoring the 2006 World Cup in Germany.
Preska said FIFA misled MasterCard into believing it had an exclusive 90-day period in early 2005 to consider a sponsorship deal for the next two World Cups when FIFA was actually "simultaneously and aggressively" negotiating with Visa.
William M. Brodsky, a lawyer for FIFA, told the appeals panel Wednesday that contracts between MasterCard and FIFA provide soccer's governing body with the right to arbitrate its disputes rather than have the courts decide them.
One issue relevant to the case is whether FIFA should be bound by a contract it signed with MasterCard in 2005 or one that it declined to sign in March 2006.
Judge Sonia Sotomayor said the arbitration panel at the very least should be permitted to decide which contract is valid. At another point in the arguments, Sotomayor questioned why some aspects of the case had not gone exclusively to arbitration.
MasterCard has maintained that FIFA wants the case arbitrated to give it a second chance to go ahead with its Visa deal.
Judge Ralph K. Winter agreed that at least some of the issues in the dispute may have to be decided through arbitration.
He called it a "huge problem" that MasterCard seemed unwilling to say whether it believed the second contract was in effect.
Pressured by Winter, MasterCard's lawyer, Martin S. Hyman, said the company believed the first contract it signed with FIFA was the only contract fully in effect.
Brodsky said FIFA believed that both contracts called for disputes to be decided through arbitration.