"Fifa has recommended that West Ham and Carlos Tevez seek arbitration at CAS," a FIFA statement said on Tuesday.
"Under the present circumstances this was deemed to be the best approach and in the interest of all parties. What is more, we also believe this to be the fastest way to solve this impasse."
The Argentinean striker wants to move to Manchester United but the move was stalled as West Ham and businessman Kia Joorabchian both claim to own the player.
Tevez is registered as a West Ham player, but Joorabchian claims he still owns the striker's economic rights and is therefore entitled to the transfer fee that would be up to £30 million.
If all parties agree to go the CAS then a decision is expected before the end of the Transfer window on August 31st.