F.I.F.A. – Players’ Status Committee / Commissione per lo Status dei Calciatori – coach disputes / controversie allenatori (2020-2021) – fifa.com – atto non ufficiale – Decision 3 November 2020

Decision of the

Single Judge of the Players' Status Committee

Passed on 3 November 2020,

regarding an employment-related dispute concerning the coach Joan Carrillo Milán

BY:

Johan van Gaalen (South Africa), Single Judge of the PSC

CLAIMANT:

JOAN CARRILLO MILÁN, Spain

RESPONDENT:

MOL FEHÉRVÁR FC, Hungary

Represented by Senn, Ferrero Sports & Entertainment

I. FACTS OF THE CASE

1. On 26 November 2019, the Spanish coach, Joan Carrillo Milán (hereinafter: the coach or the Claimant), and the Hungarian club, MOL Féhérvar FC (hereinafter: the club or the Respondent), signed an employment contract valid as from the date of its signature until 30 June 2021 (hereinafter: the contract).

2. Clause 2.2 par. 1 of the contract provides the coach’s monthly remuneration, which amounts to Hungarian Forint (HUF) 9,738,312 gross. Said clause further reads as follows: “The parties –taking into consideration that the basic salary was calculated on the basis of the net amount of EUR 25,000 (i.e. twenty five thousand Euros)– hereby clarify and affirm that the salary was fixed on a 330 HUF/EUR exchange rage. The parties shall continuously run over the previous month-end exchange rates of the Hungarian National Bank, and for those months where a difference between the 330HUF/EUR rate and the actual month rate exceeds plus or minus 5 per cent, the parties will –at the end of each calendar half-year– mutually calculate the difference and the added-up compensation sum, which will be paid or deducted simultaneously with the monthly salary of June and December or –in case of termination– the last salary.

3. Clause 2.2 par. 2 of the contract states that: “[The club] will pay [the coach’s] net monthly basic salary until the 10th day of the month following the accounting month via bank transfer to [the coach’s] bank account”.

4. Clause 3 par. 4 of the contract reads as follows: “The parties are obliged to behave in a loyal and ethical way towards each other”.

5. Clause 5 par. 5 of the contract provides that: “[The club] can terminate the present contract with immediate effect and with unilaterally notice and without reasons under paragraph b) of subsection (1) of Section 79 of Act I of 2012 on the Hungarian Labour Code”. The said paragraph b) of subsection (1) of Section 79 reads as follows: “The right of termination without notice may be exercised, without giving reasons: b) by the employer in connection with fixed-term employment relationships”. Moreover, subsection (2) of Section 79 reads as follows: “In the case of termination under paragraph b) of Subsection (1), the employee shall be entitled to absentee pay due for twelve months, or if the time remaining from the fixed period is less than one year, for the remaining period”.

6. Clause 6 par. 1 of the contract stipulates that: “[The coach] shall handle confidentially all data, facts, information on [the club] and its activities or any other information (including but not limited to the content of the contract) that became known to [the coach] during or in relation with the employment under this contract, [the coach] cannot disclose them to any third party or to the public. Nothing can be copied or reproduced, unless with the prior consent of [the club]”.

7. Clause 6 par. 4 of the contract stipulates that: “The breach of the obligation of confidentiality, as intentionally caused damage is qualified as material breach of contract of [the coach] and fives reason for termination with immediate effect pursuant to Labour Code and rise to liability for damages”.

8. Clause 39 of the contract reads as follows: “Any controversy or claim arising out or relating to this agreement shall be settled by negotiations and dispute resolutions between the parties”.

9. Clause 40 of the contract reads as follows: “Any matters not stipulated in the present contract, shall be governed by the Hungarian Labour Code (Act I of 2012), the Act I of 2004 on sport, the Employer’s policies, the regulations of the Hungarian Football Federation and other national and international football organizations, associations and the relevant provisions of the laws of Hungary.”

10. On 6 July 2020, the Respondent informed the Claimant about its decision of terminating the contract on the grounds on the following reasoning by means of a termination letter, which stated as follows: “The Sports Director and person entitled to exercise [the club’s] rights became aware that [the coach] –despite [the club’s] express prohibition– shares confidential information in his possession in connection with his employment relationship with former employee, Matyas Czuczi, who is currently not in an employment with [the club]”.

11. Furthermore, the said termination letter contains, at the end of the document, a handwritten note in Hungarian and English, which reads as follows: “The employer exercised the employer’s authority today in a personal meeting, where the termination was discussed between the employer and the employee and the reasons for it. The employee understand the dismissal by the employer and the reasons for it, but did not sign the decision on dismissal, which has been certified by the signature of this 2 witnesses present at the time of notifying the dismissal to the employee. The employer will send the signed employer’s notice to the employee today“.

12. Subsequently, the coach signed a contract with the Cypriot club AEL Larnaka FC until 30 June 2021 for a total remuneration of EUR 32,000.

II. PROCEEDINGS BEFORE FIFA

13. On 17 July 2020, the coach filed a claim against the club before FIFA. A brief summary of the parties’ positions is detailed in continuation.

a. Claim of the Claimant

14. In his claim, the Claimant explained that the club breached the contract when it unilaterally terminated it without any valid legal reason, and contested the argument raised by the Respondent in its termination letter. In his claim, the Claimant referred to five different points that, according to the latter, demonstrate that the Respondent terminated the contract without just cause:

a. That the Respondent failed to contact the Claimant as to the alleged breached of contract committed upon the alleged disclosure of confidential information and instead directly and unilaterally terminated the contract, disregarding the content of clause 3 par. 4 of the contract;

b. That Mr Matyas Czuczi, an alleged video analyst employed by the Hungarian Football Federation, is a close friend of the Claimant. As to the accusations of the club as regards the disclosure of confidential information, the Claimant argued that “the communication between disregarding private and family issues was restricted to tactical and football players’ characteristics, profiles – any kind of business information, insider tactical information or any information which may be regarded as confidential information were never shared”. Furthermore, the Claimant held that he “was told by the Sports Director of the club (Mr Zoltan Kovacs) that the management considers to employ Mr Czuczi from the next season on”.

c. Moreover, the Claimant reiterated that the Respondent never revealed or specified what information was disclosed with Mr Matyas Czuczi and that the Respondent often communicated with Mr Matyas Czuczi, “which clearly denies the alleged expressed prohibition of the club”;

d. That according to Hungarian Labour Code (Act I/2012), the club should have would be entitled to terminate the contract within 30 days upon the date on which the breach occurred. In this regard, the Claimant held that, despite the Respondent carrying the burden of the proof to demonstrate that the Claimant did disclose confidential information to Mr Matyas Czuczi, the Respondent failed to prove so and, thus, it terminated the contract without just cause on 6 July 2020.

15. In his request for relief, the Claimant requested compensation for breach of contract in the amount of HUF 116,859,745, corresponding to 12 monthly instalments of HUF 9,738,312 each (as from July 2020 until July 2021); as well as the amount of HUF 8,413,900 as “the balance of the EUR /HUF currency rate defined in Section 26 of the Employment agreement (the currency rate fixed in the Employment Agreement is HUF 330, on the date of termination HUF 353,78. The balance is 7.8%)”.

b. Reply of the Respondent

16. In its reply to the claim, the club firstly rejected the competence of FIFA, and argued that the Hungarian Courts are competent on the grounds of clause 40 of the contract.

17. As to the substance, the club referred to art. 267 of the Hungarian Code of Civil Procedure and argued that the coach had not yet proven that the termination of the contract was unlawful.

18. The club further argued that as per the coach’s claim, he incurred in two conducts, namely:

“- firstly, despite express prohibition by the Employer, the employee shares information of confidential nature that he became aware of in connection with his employment relationship with such a former employee, Mátyás Czuczi, with whom the Employer has no legal relationship for work currently;

- secondly, the employee had been continuously refusing to obey the employer’s instructions by - despite the explicit prohibition by the Employer - consulting Mátyás Czuczi regarding the MOL Fehérvár FC”.

19. Accordingly, the club submitted that under Setion 78 (1) a) of the Hungarian Labour Code and Clause 38 of the contract, it was entitled to terminate the contract due to gross negligence by the coach. In this respect, the club held that the coach disclosed confidential information to a person not belonging to its staff, Mr. Matyas Czuczi.

20. What is more, the club argued that the coach refused to follow the club’s orders upon instruction to do so, namely to stop discussing the team’s performance with Mr Czuczi, and that by doing so the coach violated clause 3.6 a) of the employment agreement.

21. The club then turned to the matter of the exchange rate, and argued that in accordance with clause 5 of the contract “for the month of July 2020 until the day of termination, Employer has paid Claimant HUF 1,509,254” and that “Based on the above, the amount of the salary due to the Employee the earliest from July 7, 2020 until June 30, 2021 is HUF 97,565,217 (EUR 25,000 * HUF 330 * 11 + EUR 25,000 / 23 working days * 19 working days). Subsequently, the club argued that “On July 6, 2020, the HUF/EUR exchange rate published by the Hungarian National Bank was HUF 352.80, therefore the amount of exchange rate correction is HUF 6,740,870.

22. The club requested that the claim be deemed inadmissible or, alternative, rejected.

c. Rejoinder of the Claimant

23. The coach argued firstly that there is no reference to jurisdiction of any arbitral tribunal in the contract, and that “the Respondent’s references to the fair an public courts and the Fundamental Law of Hungary are totally irrelevant to the existence of independent arbitral tribunals”.

24. In continuation, the coach referred to the principle of burden of proof and argued that the club was the one to prove its allegations regarding (a) the disclosure of confidential information and (b) the negligence by the coach. To this end, the coach contended that any instructions regarding his behaviour were never given by the club. The coach further elaborated as follows:

a. What kind of information? The club did not define what information was allegedly shared and why they were regarded as confidential;

b. When did the disclosure happen? The coach argues that under art. 78 (2) of the Hungarian Labour Code the club had 15 days to unilaterally terminate the contract after knowledge of the coach’s violation, hence the club was to prove that such disclosure took place after 21 June 2020 since the termination is dated 6 July 2020.

c. How did it happen? The coach argues that the club failed to explain or prove how such disclosure was performed.

d. To whom? The coach stated that only Mr Czuczi was named by the club, and that such person was employed by the Hungarian Football Federation, a communication that should be regarded as “normal”.

25. Lastly, the coach argued that he was informed to have been fired on 4 July 2020 in a restaurant in Budapest, for sporting reasons only, and that the club never informed him of the issue of the alleged violation of confidentiality.

26. The coach amended his request for relief as follows:

“The Claimant has recalculated his claim and modified as follows:

- The [contract] was to expire on the 30 June 2021. Twelve months x EUR 25,000 equals EUR 300,000. The calculation rate was fixed in the [contract] at HUF/EUR 330. In Hungarian Forints: HUF 99,000,000.

The currency compensation defined in the[contract] is HUF 35,44/EUR (HUF 10,632,000).

The club has paid HUF 1,509,254 (for the period 1-7 July 2020) to be deducted.

Altogether: HUF 99,000,000 + HUF 10,632,000 – HUF 1,509,254 equals with HUF 108,122,746”.

27. The coach states that the Hungarian National Bank exchange rate HUF / EUR on 15 October 2020 is 365,44.

d. Final comments of the Respondent

28. The club reiterated its position and argued that the case falls within the exclusive jurisdiction of the Hungarian courts.

29. As to the substance, the club reiterated that the coach admitted to have discussed tactics, line-ups and other matters with Mr Czuczi.

30. The club also objected to the evidence filed by the coach in his replica.

III. CONSIDERATIONS OF THE SINGLE JUDGE OF THE PLAYER’S STATUS COMMITTEE

a. Admissibility

31. First of all, the Single Judge of the Players’ Status Committee (hereinafter: the Single Judge) analysed whether he was competent to deal with the present matter. In this respect, he took note that the present matter was submitted to FIFA on 17 July 2020. Taking into account the wording of art. 21 of the June 2020 edition of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (hereinafter: the Procedural Rules), the aforementioned edition of the Procedural Rules is applicable to the matter at hand.

32. Subsequently, the Single Judge referred to art. 3 of the Procedural Rules and noted that in accordance with art. 23 par. 1 and 3 in combination with art. 22 lit. c) of the October 2020 edition of the Regulations on the Status and Transfer of Players, he is in principle competent to deal with the matter at stake, which concerns an employment-related dispute of an international dimension between a Spanish coach and an Hungarian club.

33. Notwithstanding the above, the Single Judge observed that the Respondent challenged the competence of FIFA arguing that the Hungarian Courts are exclusively competent to hear the dispute.

34. While analysing whether he was competent to hear the present matter, the Single Judge considered that he should, first and foremost, analyse whether the contract at the basis of the present dispute actually contains a jurisdiction clause.

35. Having said this, the Single Judge turned his attention to clauses 39 and 40 of the contract, the latter of which is at the basis of the Respondent’s objection to FIFA’s jurisdiction. According to said clauses, respectively “Any controversy or claim arising out or relating to this agreement shall be settled by negotiations and dispute resolutions between the parties” and “Any matters not stipulated in the present contract, shall be governed by the Hungarian Labour Code (Act I of 2012), the Act I of 2004 on sport, the Employer’s policies, the regulations of the Hungarian Football Federation and other national and international football organizations, associations and the relevant provisions of the laws of Hungary.”

36. In view of the aforementioned contents, the Single Judge was of the opinion that clause 40 of the contract does not make clear reference the Hungarian Courts. Therefore, he deemed that said clause does not constitute a jurisdiction clause, but rather establishes a choice of law. What is more, the Single Judge underlined the contents of clause 39, which refers to dispute resolution in a general manner and not specifically, nor exclusively, establishes jurisdiction in favour of the Hungarian Courts.

37. In light of the above, and while having in mind the longstanding jurisprudence of the Players’ Status Committee, the Single Judge established that there is no clear and exclusive contractual clause in favour of the Hungarian Courts, and consequently the Respondent’s objection to the competence of FIFA to deal with the present matter has to be rejected. The Single Judge 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.

b. Applicable legal framework

38. 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 respect, he confirmed that in accordance to art. 26 par. 1 and 2 of the October 2020 edition of the Regulations on the Status and Transfer of Players and considering that the present claim was lodged with FIFA on 17 July 2020, the June 2020 edition of the Regulations on the Status and Transfer of Players (hereinafter: the Regulations) is applicable to the present matter as to the substance.

c. Burden of proof

39. The Single Judge recalled the basic principle of burden of proof, as stipulated in art. 12 par. 3 of the Procedural Rules, according to which a party claiming a right on the basis of an alleged fact shall carry the respective burden of proof. Likewise, he stressed the wording of art. 12 par. 4 of the Procedural Rules, pursuant to which he may consider evidence not filed by the parties.

40. In this respect, the Single Judge also recalled that in accordance with art. 6 par. 3 of Annexe 3 of the Regulations, FIFA’s judicial bodies may use, within the scope of proceedings pertaining to the application of the Regulations, any documentation or evidence generated or contained in TMS.

d. Merits of the dispute

41. His competence 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 arguments and the documentation submitted by the parties. However, the Single Judge emphasised that in the following considerations it will refer only to the facts, arguments and documentary evidence, which it considered pertinent for the assessment of the matter at hand.

i. Main legal discussion and considerations

42. By doing so, the Single Judge recalled the parties’ respective positions, and observed that the coach claims a difference in the amount paid to him due to variation of the exchange rate HUF vs EUR. Additionally, the Single Judge was observant of the fact that while the Claimant deems that the contract was breached by the Respondent on account of violation of the duty of confidentiality, the latter claimed that it had just cause to terminate it.

43. The Single Judge then focussed on the Claimant’s claim for outstanding remuneration, comprising of the difference between the exchange rate of the Hungarian Forint and the Euro, namely in the percentage of 7.8%.

44. The Single Judge, in this respect, referred to art. 12 par. 3 of the Procedural Rules, and observed that the coach has not filed any evidence as to such exchange rates in spite of having argued that the Hungarian National Bank exchange rate HUF / EUR on 15 October 2020 is 365,44. Consequently, the Single Judge concluded that such claim could only be rejected.

45. Accordingly, the Single Judge turned to the second main issue of the case at hand, as disputed by the parties, and established that his task was to determine whether the club had just cause to terminate the contract.

46. In this regard, the Single Judge emphasized that the club contends that it was entitled to terminate the contract as it did, but oddly seems to accept that it should pay to the coach 12 months of salaries; however also disputing such calculation.

47. At this point, the Single Judge wished to recall for a third time the aforementioned art. 12 par. 3 of the Procedural Rules, and emphasized the club has not provided any evidence as to the coach’s misbehaviours, especially in light of the fact that the latter, conversely to the club’s arguments raised in its final comments, denies having shared confidential information with third parties. What is more, the Single Judge emphasized that the club has filed no evidence pertaining to the allegations that it had instructed the coach to cease sharing information with Mr. Matyas Czuczi, and moreover that the coach supposedly refused to comply with such instructions.

48. Consequently, the Single Judge determined that the Respondent failed to meet its burden of proof under art. 12 par. 3 of the Procedural Rules; in other words, the Single Judge confirmed that the Respondent could not establish that the reasons brought forward by the club in the termination letter were legitimate to render the contract prematurely terminated.

49. For the sake of completeness, the Single Judge wished to underline that, equally, the coach could not establish evidence in support of his allegation that he had been fired by the club on 4 July 2020 in a restaurant in Budapest, for sporting reasons only, insofar as the coach filed a link which could not be accessed and seemed to be in Hungarian only. The Single Judge found it important to recall the contents of art. 9 par. 1 lit e) and art. 9bis par. 2 of the Procedural Rules in this regard.

50. Having so found, the Single Judge was eager to underline that only a breach or misconduct which is of a certain severity justifies the termination of a contract. In other words, only when there are objective criteria, which do not reasonably permit to expect a continuation of the employment relationship between the parties, a contract may be terminated prematurely. Hence, if there are more lenient measures which can be taken in order for an employer to ensure the employee’s fulfilment of his contractual duties, such measures must be taken before terminating an employment contract. A premature termination of an employment contract can only ever be an ultima ratio measure.

51. Since it has been determined that the club has not been able to establish that the coach breached the contract, the Single Judge was comfortable to conclude that the termination of the contract on 6 July 2020 was not made as ultima ratio measure, and accordingly that the Respondent terminated the contract without just cause. The Single Judge hence decided that the Respondent shall bear the consequence of such unlawful termination.

ii. Consequences

52. In continuation, the Single Judge focused his attention on the calculation of the amount of compensation for breach of contract in the case at stake as a consequence of the aforementioned termination of the contract. To this end, he held that it first of all had to clarify as to whether the pertinent employment contract contains 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.

53. The Single Judge noted that the parties seem to refer to section 84 of the Hungarian Labour Code to calculate the amount of compensation due. Nonetheless, the Single Judge observed, in line with the well-established practice of the Players’ Status Committee, that the contract bears no clear, proportionate and reciprocal clause in the contract according to which such calculation could take place.

54. Therefore, the Single Judge considered that it is not appropriate for this case to apply specific aspects of a particular national law, but rather the Regulations, the general principles of law and, where it exists, the well-established jurisprudence of the Players’ Status Committee. As a consequence, the Single Judge determined that the amount of compensation payable by the club to the coach had to be assessed in application of the other parameters set out in the jurisprudence of the Players’ Status Committee.

55. The Single Judge hence turned his attention to the remuneration and other benefits due to the coach under the existing contract and/or the new contract, which criterion was considered to be essential.

56. The Single Judge then proceeded with the calculation of the monies payable to the coach under the terms of the contract as from its date of termination without just cause by the club, i.e. 6 July 2020, until 30 June 2021, and concluded that the coach would have received in total HUF 116,859,744 (i.e. 12 months à HUF 9,738,312) as remuneration had the contract been executed until its expiry date.

57. The Single Judge further noted that that the club argued that it paid HUF 1,509,254 for the period between 1 and 6 July 2020, receipt of which was confirmed by the coach.

58.Consequently, the Single Judge concluded that the amount of HUF 115,350,490 (i.e. HUF116,859,744 minus HUF 1,509,254) serves as the basis for the final determination of theamount of compensation for breach of contract in the case at hand.59.In continuation, the Single Judge verified as to whether the Claimant had signed anemployment contract with another club during the relevant period of time, by means of whichhe would have been enabled to reduce his loss of income. The Single Judge confirmed thatthe Single Judge indeed found new employment, for which he is entitled to a totalremuneration of EUR 32,000, which is approximately HUF 10,560,000 considering theexchange rate of the contract EUR 1 x HUF 330. Hence, the Single Judge concluded that thecoach was able to mitigate his damages mitigated by HUF 10,560,000, arriving therefore ata mitigated compensation of HUF 115,339,930 (i.e. HUF 115,350,490 minus HUF10,560,000).60.Accordingly, the Single Judge decided to that the compensation due to the coach wouldamount to HUF 115,339,930. However, on account of the principle of non ultra petita, theSingle Judge concurred that the coach limited his claim to the residual value of the contractof HUF 99,000,000, and therefore decided that such is the amount that should be awardedas compensation for breach of contract.61.Consequently, on account of all of the above-mentioned considerations and the specificitiesof the case at hand, the Single Judge decided to partially accept the coach’s claim and thatthe club must pay the amount of HUF 99,000,000 as compensation for breach of contract inthe case at hand.e.Costs62.The Single Judge observed the temporary amendments outlined in art. 18 par. 1 lit. i) of theProcedural Rules, which entered in force in 10 June 2020, according to which no costs shallbe levied for claims filed between 10 June 2020 and 31 December 2020 (both inclusive). Onaccount of the fact that the claim at hand was filed on 17 July 2020, no costs shall belevied by any of the parties.63.For the sake of completeness, the Single Judge referred to art. 18 par. 4 of the ProceduralRules, and decided that no procedural compensation was to be awarded in these proceedings.

IV. DECISION OF THE SINGLE JUDGE OF THE PLAYERS' STATUS COMMITTEE

1. The claim of the Claimant, JOAN CARRILLO MILÁN, is admissible.

2. The claim of the Claimant is partially accepted.

3. The Respondent, MOL FEHÉRVÁR FC, has to pay to the Claimant HUF 99,000,000 as compensation for breach of contract without just cause.

4. Any further claims of the Claimant are rejected.

5. The Claimant is directed to immediately and directly inform the Respondent of the relevant bank account to which the Respondent must pay the due amount.

6. The Respondent shall provide evidence of payment of the due amount in accordance with this decision to psdfifa@fifa.org, duly translated, if applicable, into one of the official FIFA languages (English, French, German, Spanish).

7. In the event that the amount due, plus interest as established above is not paid by the Respondent within 30 days, as from the notification by the Claimant of the relevant bank details to the Respondent, the following consequences shall arise:

1.

In the event that the payable amount as per in this decision is not paid within the granted deadline, the present matter shall be submitted, upon request, to the FIFA Disciplinary Committee.

8. The decision is rendered free of costs.

For the Players' Status Committee:

Emilio García Silvero

Chief Legal & Compliance Officer

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) within 21 days of receipt of the notification of this decision.

NOTE RELATED TO THE PUBLICATION:

FIFA may publish this decision. For reasons of confidentiality, 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 Procedural Rules).

CONTACT INFORMATION:

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