FIFA Blocked from Arbitration Against MasterCard

Oh, soccer.  What are we going to do about you? (Also: When will I care?)

MasterCard has long been the corporate credit card sponsor of the World Cup.  So, it was with some surprise, shock, and hurt that, back in November, MasterCard found that it was being challenged and almost out of the running as lead sponsor when Visa showed up with its own claim.

MasterCard blamed FIFA, the Federation Internationale de Football Association, and used some unkind words like “blatant” and “deceitful” and “violation.”  Then, of course, it sued.

Visa was barred from participating in the suit.  No doubt their hopes were along the lines of remaining the new corporate sponsor once the chips finished falling.

They didn’t.

U.S. District Judge Loretta Preska. Judge Preska found in favor of MasterCard, claiming that FIFA negotiators "lied repeatedly to MasterCard," including when they assured the company that FIFA "would not sign a deal for the post-2006 sponsorship rights with anyone else unless it could not reach agreement with MasterCard."

FIFA disagreed, of course, and alleges that it has acted in all ways as honorable as possible when trying to pull a fast one on MasterCard by going with Visa. The group said it is "convinced that at all times it acted in good faith" and will "vigorously pursue its case." FIFA, which is based in Zurich, said an arbitration tribunal there "is competent to hear this dispute, and FIFA awaits the outcome of this proceeding."  Visa’s response: “[We are] surprised and dismayed to learn that during the negotiations, FIFA had not been truthful with Visa regarding its obligations to MasterCard."

In trying to recoup its losses, and regain some semblance of control, FIFA attempted to pursue arbitration against MasterCard in, of all places, Switzerland.  (Only, as it turns out, Switzerland makes perfect sense since that’s where FIFA is located.  Thanks, Wikipedia!)  However, a U.S. federal judge (Loretta Preska, again, who is now the Official Hater of the FIFA) has since stepped in and put the kibosh on that plan.

During a hearing in Manhattan on Monday, Preska enjoined FIFA from pursuing the Swiss arbitration. She also asked MasterCard not to seek any counter claims against FIFA in arbitration until a U.S. appeals court has ruled on her decision.