F.I.F.A. – Players’ Status Committee / Commissione per lo Status dei Calciatori – coach disputes / controversie allenatori (2019-2020) – fifa.com – atto non ufficiale – Decision 14 February 2020

Decision of the Single Judge

of the Players’ Status Committee

passed on 14 February 2020,

by

Roy Vermeer (the Netherlands)

Single Judge of the Players’ Status Committee,

on the claim presented by the coach

Henrique Manuel Da Silva Calisto, Portugal

represented by Mr Javier Fererro Muñoz

& Mr Ignacio Triguero Gea

as Claimant / Counter-Respondent

against the club

Dalian Yifang FC, China PR

represented by Mr William Sternheimer

& Mr Mario Flores Chemor

as Respondent / Counter-Claimant

regarding an employment related dispute between the parties

I. Facts of the case

1. On 16 March 2018, the Portuguese coach Henrique Manuel Da Silva Calisto (hereinafter: the Claimant / Counter-Respondent or the coach) and the Chinese club Dalian Yifang FC (hereinafter: the Respondent / Counter-Claimant or the club) signed an employment contract (hereinafter: the contract), valid as from 20 March 2018 until 31 December 2018.

2. Furthermore, said contract contained an extension option for one or two more seasons, depending on the sporting results of the team at the end of the 2018 season. The clause literally contain the following wording: “(1) in the event that the team is not relegated from CSL in 2018 season, the term of this contract shall be extended for one (1) additional season, that is, the term of this contract shall be from March 20th, 2018 to December 31st, 2019. (1) in the event that the team ends the 2018 season in the top 12 teams of the CSL, the term of this contract shall be extended for two (2) additional seasons, that is, the term of this contract shall be from March 20th, 2018 to December 31st, 2020”.

3. Article 4 of the contract provided that the coach was entitled to the following remuneration:

- For the 2018 season, the net amount of EUR 240,000, payable in 9 instalments of EUR 26,666.66, within 15 days after the last day of each month, the first payment not to be made later than 30 April 2018;

- For the 2019 season, the net amount of EUR 240,000, payable in 12 instalments of EUR 20,000, within 15 days after the last day of each month;

- For the 2020 season, the net amount of EUR 240,000, payable in 12 instalments of EUR 20,000, within 15 days after the last day of each month.

4. Article 4.3 of the contract stipulates: “The cash remuneration and the bonuses payable by the Club to the Coach as per this Contract are NET of China's taxes, furthermore, any Chinese withholding taxes imposed by the Chinese Government/Law will be born and paid out by the Club”.

5. Furthermore, article 6.1 of the contract provided that “In the event the Coach unilaterally terminates the Contract without legal grounds, the Coach will Indemnify the Club with a net sum of Euro 240.000,00 (two hundred fifty thousand euros) and the Club has the right to stop making any payment to the Coach Immediately.”. Article 6.4 of the contract contains the following clause: “In the event the Club unilaterally terminates the Contract without legal grounds, the Club will pay a severance corresponding to the outstanding NET fixed cash remuneration of the Coach from the moment of its dismissal until the end of the season.”

6. Art. 9 of the contract stipulates that: “This contract is subject to the regulations of CFA and FIFA. Any dispute arising out of this Contract shall be submitted to the relevant competent body of CFA pursuant to CFA’s Regulations. In the event that any parties dissatisfied with decision of CFA, then each party shall have the right to submit the dispute to relevant competent body of FIFA pursuant to FIFA’s Regulations. If there is any conflict between CFA and FIFA, the FIFA’s decision shall prevail”.

7. On 26 December 2018, the club informed the coach in writing that the contractual relationship existing between them would terminate on 31 December 2018, without specifying any further reason.

8. On 4 February 2019, the coach lodged a claim with FIFA against the club, arguing that the latter had unlawfully terminated the contract on 26 December 2018, when the latter notified him that the contract would terminate on 31 December 2018 and that, as from 1 January 2019, no legal relationship would exist between the parties.

9. In his claim, the coach requests to be awarded outstanding remuneration in the amount of CNY 50,000, corresponding to the bonus for the victory in the last game of the season, as well as compensation for breach of contract in the amount of EUR 480,000, corresponding the residual value of contract until 31 December 2020, or in the alternative, compensation for breach of contract in the amount of EUR 240,000, corresponding the residual value of contract until 31 December 2019. Furthermore, the coach asks the club be ordered to issue him “certificates that proof that all the corresponding taxes […] have been paid to the Chinese Tax Authorities”.

10. In this respect, the coach recalled that the team managed to end up in the 11th position on the table at the end of the season, i.e. 11 November 2018. Consequently, he pointed out that, pursuant to the condition outlined at art. 2.1. lit (2) of the employment contract, the employment relationship between the parties was automatically extended for two more seasons.

11. The coach further explained that the parties had agreed on the payment of an additional bonus for each victory or draw during the Chinese Super League season, to be paid after each game and that the club failed to pay him the bonus for a victory on the last game of the season. More in particular, given that the sum for each win was between CNY 50,000 and CNY 60,000 and considering the level of the opponent, the coach asked to be paid the lower amount of CNY 50,000.

12. Lastly, the coach pointed out that the compensation clause envisaged in the contract lacks reciprocity, clarity and it is unambiguously unbalanced in favour of the club. Consequently, he demanded that it be disregarded when considering the amount of compensation to be paid to him.

13. Moreover, the coach underlined that the payments he was entitled to were net of taxes.

14. The club firstly maintained that FIFA is not competent to hear the present matter due to the content of art. 9 of the employment contract. Furthermore, the club claimed that the extension clauses are invalid, mainly due to the fact that – put together – they amount to 24 months in respect of an initial duration of the employment contract of 9 months only.

15. Moreover, the club explained that, prior to the last game of the season, the team was in the 15th position and, thus, allegedly in the relegation zone. Consequently, according to the club, the final rank obtained after the last match could not be attributed to the work of the coach and his team but rather to the fortunate circumstance of the competing teams not winning their matches.

16. Subsidiarily, the club argued that the employment contract contains a “clear and unambiguous termination clause”, i.e. art. 6 of the contract, and that its effect is reciprocal and thus applicable in the case at hand.

17. Moreover, the club pointed out that the coach had not intervened when a fight during two of his players arose during a training and that he failed to get back to the club with a detailed report at the end of the season. All of that led the club to conclude that the contract was rightfully terminated or, in the alternative, that the coach’s contributory negligence should be taken into account when considering the amount of compensation to be awarded to him.

18. In conclusion, the club requested FIFA to declare the claim of the coach inadmissible, and in the alternative, to order the coach to pay compensation for breach of contract in the amount of EUR 240,000, as well as 5% interest p.a. as from 31 December 2018 until the date of effective payment.

19. Finally, FIFA was informed that, after the unilateral termination of the contract, the coach remained unemployed.

II. Considerations of the Single Judge of the Players’ Status Committee

1. First of all, the Single Judge of the Players’ Status Committee (hereinafter also referred to as: “the Single Judge”) analysed whether he was competent to deal with the matter at hand. In this respect, he took note that the present matter was submitted to FIFA on 4 February 2019. Consequently, the Single Judge concluded that the 2018 edition of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution (hereinafter: “the Procedural Rules”) is applicable to the matter in hand (cf. art. 21 of the Procedural Rules).

2. Furthermore, the Single Judge confirmed that, on the basis of art. 3 par. 1 of the Procedural Rules in connection with art. 23 par. 1 and 3 as well as art. 22 c) of the 2018 edition of the Regulations on the Status and Transfer of Players, he shall adjudicate on an employment-related dispute between a club or an association and a coach that have an international dimension. As a consequence, the Single Judge was in principle the competent body to decide on the present litigation involving a Portuguese coach and a Chinese club regarding an employment related dispute.

3. However, the Single Judge noted that the club questioned the competence of the Single Judge to decide the matter at hand aseerting that the deciding bodies existing under the China Football Association (CFA) would be competent to deal with the matter at hand.

4. In relation to the above, the Single Judge deemed it vital to outline that one of the basic conditions that needs to be met in order to establish that another organ than the Players’ Status Committee, or its Single Judge, is competent to settle an employment-related dispute between a club and a coach of an international dimension, is that the jurisdiction of the relevant national court or national dispute resolution body derives from a clear reference in the employment contract.

5. While analysing whether it was competent to hear the present matter, the Single Judge considered that he should, first and foremost, analyse whether the employment contract at the basis of the present dispute actually contained a jurisdiction clause in favour of another decision-making body than those of FIFA.

6. Having said this, the Single Judge turned his attention to art. 9 of the contract, which stipulates that “This contract is subject to the Regulations of CFA and FIFA. Any dispute arising out of this contract shall be submitted to the relevant competent body of CFA pursuant to CFA’s Regulations. In the event that any parties dissatisfied with decision of CFA, then each party shall have the right to submit the dispute to relevant competent body of FIFA pursuant to FIFA’s Regulations. If there is any conflict between CFA and FIFA, the FIFA’s decision shall prevail”.

7. In view of the aforementioned clause, the Single Judge was of the opinion that art. 10 of the employment contract mentions that “FIFA’s decision shall prevail”. Therefore, the Single Judge deemed that said clause can by no means be considered as a clear arbitration clause exclusively in favour of the decision-making bodies of the CFA and that the parties had specifically agreed that disputes would ultimately be settled by the decision-making bodies of FIFA.

8. What is more, the Single Judge emphasised that the Club had also failed to prove that the decision-making bodies of the CFA complied with the other conditions of art. 22 c) of the FIFA RSTP, i.e. that any such body shall be independent and shall guarantee fair procedures.

9. On account of all the above, the Single Judge established that the club’s objection towards the competence of FIFA to deal with the present matter has to be rejected, and that he is competent, on the basis of art. 22 lit. c) of the Regulations on the Status and Transfer of Players, to consider the present matter as to the substance.

10. Subsequently, the Single Judge analysed which edition of the Regulations on the Status and Transfer of Players should be applicable as to the substance of the matter. In this regard, he recalled that the present matter was submitted to FIFA on 4 February 2019. Therefore, the Single Judge held that the June 2018 edition of the Regulations on the Status and Transfer of Players (hereinafter: “the Regulations”) is applicable to the matter at hand as to the substance (art. 26 par. 1 and 2 of the Regulations).

11. The competence of the Single Judge and the applicable regulations having been established and entering into the substance of the matter, the Single Judge started by acknowledging the above-mentioned facts as well as the documentation contained in the file. However, the Single Judge emphasised that in the following considerations he will refer only to the facts, arguments and documentary evidence, which he considered pertinent for the assessment of the matter at hand.

12. In this respect, the Single Judge acknowledged that, on 16 March 2018, the coach and the club signed an employment contract, valid as from 20 March 2018 until 31 December 2018, with an extension option for one or two more seasons, depending on the team’s sporting results at the end of the 2018 season.

13. Indeed, the Single Judge noted that in accordance with art. 2 of the contract, the contract of the coach would be extended, depending on the sporting performance of the team.

14. That said, the Single Judge decided that the first question he had to address was the question whether the employment relationship between the parties was bound to end on December 2018.

15. In this respect, the Single Judge took note that the clauses at stake do not appear to be unilateral in the sense that they are triggered not upon the will of one of the parties, but in relation to sporting results.

16. What is more, the Single Judge established that it remains undisputed between the parties that the said sporting results of the club were effectively achieved. What is more, the club’s arguments concerning the alleged ‘luck’ of the coach, cannot be upheld in the Single Judge’s view. The sporting results during a season are per se always depending not only on the result of one club, but also on the results of the competing clubs. The Single Judge therefore fails to see the logic of the club to argue that the club’s position in the league was only due to the other clubs losing during the last round of the season.

17. As a result of the foregoing, the Single Judge concluded that the contract between the club and the coach was extended for 2 more seasons, because the team reached at least the 12th place in the CSL at the end of the 2018 season. Therefore, the Single Judge concluded that the contract between the coach and the club was – after its extension - effectively valid until 31 December 2020.

18. Subsequently, the Single Judge focussed his attention on the termination of the contract by the club on 26 December 2018. In this regard, the Single Judge considered that the first question to be addressed in the present matter was whether the club had terminated the contract with or without just cause on 26 December 2018.

19. With regards to the above mentioned, the Single Judge remarked that the coach had accused the club of having terminated their contractual relationship without just cause. The Single Judge made a note that, because of the aforementioned, the coach deemed inter alia being entitled to claim from the club the payment of outstanding remuneration in the amount of CNY 50,000 together with 5% interest p.a., and compensation for breach of contract in the sum of EUR 480,000, together with 5% interest p.a.

20. In this regard, the Single Judge recalled that the club considered having had just cause to terminate the contract since, based on the alleged non-intervention of the coach in respect of the fight arose between players during a training and with regard to the ‘end of the season’ report.

21. In this context, the Single Judge acknowledged that it had to examine whether the reason put forward by the club could justify the termination of the contract in the present matter.

22. First of all, after having analysed the respective argumentation of the parties, the Single Judge was of the opinion that the club’s arguments concerning the coach’s behaviour in respect of the fight that arose between players during a training should be dismissed. In the opinion of the Single Judge, said allegation was not backed with sufficient documentary evidence. The Single Judge pointed out that – even if said alleged bad behaviour of the coach in relation to the alleged fight between two players at the training would have been proven – said circumstance could by no means lead to the consideration that the employment relationship could not continue. In this respect, the Single Judge emphasized that an early termination of a contract should always be considered as the ultima ratio.

23. Moreover, while analysing the club’s argument that the club failed to get back to the club at the end of the season ‘with a detailed report’, the Single took note that said alleged obligation does not seem to derive from any contractual provision. Therefore, the Single Judge was eager to emphasize that said argument of the club also had to be rejected.

24. Finally, the Single Judge also underlined that none of the arguments raised by the club were included in the termination notice of 26 December 2018.

25. In view of the aforementioned, the Single Judge therefore had no other option but to reject the arguments brought forward and came to the conclusion that on 26 December 2018, the club terminated the contract without just cause. Already, at this point, the Single Judge wished to point out that therfore the counterclaim of the club had to be rejected.

26. After having established the foregoing, the Single Judge went on analysing the consequences of the breach of contract without just cause.

27. Before entering the analysis of the consequences of the unjust breach of contract on the part of the club, the Single Judge deemed it appropriate to first assess whether any outstanding remuneration was still due by the club to the coach.

28. Subsequently, the Single Judge analyzed the request of the player for the amount of CNY 50,000 as bonus “because the club failed to pay him the bonus for a victory on the last game of the season”. In this regard, the Single Judge noted that, although it remained undisputed that the club has won the last game of the season, it was not possible to determine what the amount was that the coach was entitled to. As a result, the Single decided to reject this part of the coach’s claim.

29. Having established the aforementioned, and turning his attention to the compensation payable to the coach by the club, following the termination without just cause of contract by the latter, the Single Judge held that it had to be first of all clarified whether the contract at the basis of the present dispute contained a provision by means of which the parties had beforehand agreed upon an amount of compensation payable by the contractual parties in the event of breach of contract.

30. In this respect, the Chamber wished to recall that, in art. 6.1 and 6.4 of the contract, the following is stipulated “In the event the Coach unilaterally terminates the Contract without legal grounds, the Coach will Indemnify the Club with a net sum of Euro 240.000,00 (two hundred fifty thousand euros) and the Club has the right to stop making any payment to the Coach Immediately.”. Article 6.4 of the contract contains the following clause: “In the event the Club unilaterally terminates the Contract without legal grounds, the Club will pay a severance corresponding to the outstanding NET fixed cash remuneration of the Coach from the moment of its dismissal until the end of the season.”

31. With the above in mind, the Single Judge considered noteworthy to mention, from the outset, that, due to their important objective of setting forth, in advance, the indemnity to be payable by a party in case of breach of contract, compensation clauses should be clear, balanced reciprocal and give no room for ambiguity.

32. Taking into account the clause at stake, the Singe Judge considered that the aforementioned clause cannot be considered as it is not reciprocal and not balanced. Indeed, the relevant clause would only entitle the coach to receive his outstanding remuneration and no compensation for the early termination of the contract, which is clearly at odds with one of the cornerstones of the RSPT, i.e. contractual stability. Therefore, the Single Judge decided not to apply the relevant clause for the calculation of compensation.

33. As to calculation of compensation, the Single Judge reverted to the established jurisprudence and pointed out that the amount to be taken into account as the basis for the calculation of the compensation due to the coach amounted to EUR 480,000, which corresponds to the remaining salaries for the period between 1 January 2019 and 31 December 2020.

34. Equally, the Single Judge verified as to whether the coach had signed a new employment contract after having been dismissed by the club on 31 December 2018, by means of which he would have been enabled to reduce his loss of income. According to the constant practice, such remuneration under a new employment contract would be taken into account in the calculation of the amount of compensation for breach of contract in connection with the coach’s general obligation to mitigate his damages.

35. In this respect, the Single Judge took note that the coach did not sign a new employment contract with another club after the unilateral termination of the contract by the club.

36. Consequently, on account of all of the above-mentioned considerations and the specificities of the case at hand, the Single Judge decided that the club must pay the amount of EUR 480,000 to the coach, which was considered reasonable and proportionate as compensation for breach of contract in the case at hand.

37. In continuation, and with regard to the coach’s request for interest, the Single Judge, in accordance with the well-established jurisprudence, decided that the club has to pay to the coach 5% interest p.a. on the amount of EUR 480,000 as from 1 January 2019 until the date of effective payment

38. What is more, the Single Judge decided to accept the coach’s request to be provided with “certificates that proof that all the corresponding taxes […] have been paid to the Chinese Tax Authorities”. In this respect, the Single Judge referred to the relevant clauses in the contract, which clearly stipulate that the amounts to paid by the club to the coach are net amounts. As a result, the Single Judge deemed that the coach had a justified reason to request the tax certificates, proving that the relevant taxes had been paid to the Chinese Tax Authorities, as the amounts awarded as per this decision are also to be considered net amounts.

39. In addition, the Single Judge established that any other request of the coach had to be rejected, as well as that the counterclaim of the club is to be rejected.

40. Finally, the Single Judge referred to art. 25 par. 2 of the Regulations in combination with art. 18 par. 1 of the Procedural Rules, according to which, in the proceedings before the Players’ Status Committee, including the Single Judge, costs in the maximum amount of CHF 25,000 are levied. The relevant provision further states that the costs are to be borne in consideration of the parties’ degree of success in the proceedings.

41. Furthermore and according to Annexe A of the Procedural Rules, the costs of the proceedings are to be levied on the basis of the amount in dispute. The amounts in dispute to be taken into consideration in the present proceedings are EUR 480,000 and CYU 50,000. Consequently, the Single Judge concluded that the maximum amount of costs of the proceedings corresponds to CHF 25,000.

42. Considering that, in the case in hand, the coach’s claim is admissible and was partially accepted and taking into account that the club was the party at fault, the Single Judge determined the costs of the current proceedings in the amount of CHF 25,000 and held that such costs have to be borne by the club.

III. Decision of the Single judge of the Players’ Status Committee

1. The claim of the Claimant/Counter-Respondent, Henrique Manuel Da Silva Calisto, is admissible.

2. The claim of the Claimant/Counter-Respondent is partially accepted.

3. The Respondent/Counter-Claimant, Dalian Yifang FC, has to pay to the Claimant/Counter-Respondent, within 30 days as from the date of notification of the present decision, compensation for breach of contract in the amount of EUR 480,000 net, plus 5 % interest p.a. as from 1 January 2019 until the date of effective payment.

4. The Respondent/Counter-Claimant is ordered to provide the Claimant/Counter-Respondent with the relevant certificate attesting the payment of taxes to the competent authorities in the amount under point 3. above.

5. In the event that the aforementioned sum plus interest is not paid by the Respondent/Counter-Claimant within the stated time limits, the present matter shall be submitted, upon request, to the FIFA Disciplinary Committee for consideration and a formal decision.

6. Any further claim lodged by the Claimant/Counter-Respondent, is rejected.

7. The counter-claim of the Respondent/Counter-Claimant is rejected.

8. The final costs of the proceedings in the amount of CHF 25,000 are to be paid by the Respondent/Counter-Claimant, as follows:

8.1 The amount of CHF 20,000 has to be paid to FIFA. Given that the Respondent/Counter-Claimant has already paid the amount of CHF 5,000 as advance of costs at the start of the present proceedings, the latter shall pay an additional amount of CHF 15,000 to FIFA to the following bank account with reference to case nr. 19-00296/sje::

UBS Zurich

Account number 366.677.01U (FIFA Players’ Status)

Clearing number 230

IBAN: CH27 0023 0230 3666 7701U

SWIFT: UBSWCHZH80A

8.2 The amount of CHF 5,000 has to be paid directly to the Claimant/Counter- Respondent.

9. The Claimant/Counter-Respondent is directed to inform the Respondent/Counter-Claimant immediately and directly of the account number to which the remittances under points 3. and 8.2 above are to be made and to notify the Players’ Status Committee of every payment received.

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Note related to the publication:

The FIFA administration may publish decisions issued by the Players’ Status Committee or the DRC. Where such decisions contain confidential information, FIFA may decide, at the request of a party within five days of the notification of the motivated decision, to publish an anonymised or a redacted version (cf. article 20 of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber).

Note related to the appeal procedure:

According to article 58 par. 1 of the FIFA Statutes, this decision may be appealed against before the Court of Arbitration for Sport (CAS). The statement of appeal must be sent to the CAS directly within 21 days of receipt of notification of this decision and shall contain all the elements in accordance with point 2 of the directives issued by the CAS. Within another 10 days following the expiry of the time limit for filing the statement of appeal, the appellant shall file a brief stating the facts and legal arguments giving rise to the appeal with the CAS (cf. point 4 of the directives).

The full address and contact numbers of the CAS are the following:

Court of Arbitration for Sport

Avenue de Beaumont 2

1012 Lausanne

Switzerland

Tel: +41 21 613 50 00

Fax: +41 21 613 50 01

e-mail: info@tas-cas.org

For the Dispute Resolution Chamber:

Emilio García Silvero

Chief Legal & Compliance Officer