F.I.F.A. – Players’ Status Committee / Commissione per lo Status dei Calciatori – club vs club disputes / controversie tra società – (2016-2017) – fifa.com – atto non ufficiale – Decision 8 May 2017

Decision of the Single Judge

of the Players’ Status Committee

passed in Zurich, Switzerland, on 8 May 2017,

by

Raymond Hack (South Africa)

Single Judge of the Players’ Status Committee,

on the claim presented by the club

Club B, Country C

as “Claimant”

against the club

Club D, Country E as “Respondent”

regarding a contractual dispute between the parties relating to the player,

Player A

Player A

I. Facts of the case

1. On 22 August 2015, the Club of Country C, Club B (hereinafter: the Claimant), and the Club of Country E, Club D (hereinafter: the Respondent), signed a transfer agreement according to which the Respondent agreed to pay the Claimant the amount of EUR 1,200,000 net for the permanent transfer of the player, Player A (hereinafter: the player), as follows:

 EUR 600,000 by 30 September 2015;

 EUR 600,000 by 1 March 2016.

2. The transfer agreement also foresaw that “In case one of the above mentioned transfer fee instalments is not paid on time, [the Respondent] will pay a fine of EUR 200,000 (…) for each late instalment payment. Payment will be made after receipt of a valid invoice”.

3. On 2 September 2015, the Claimant addressed an invoice to the Respondent, requesting the latter to pay the first instalment of EUR 600,000.

4. On 27 December 2015, the Respondent informed the Claimant that it could not comply with its financial obligations and proposed to settle the matter by paying either “EUR 500,000 by way of monthly repayments of EUR 100,000 as of 15 January 2015, or in the alternative, EUR 400,000 payable in one instalment by no later 15 January 2015”.

5. In reply, on 11 January 2016, the Claimant informed the Respondent that it did not agree with the proposal and requested the latter to pay the outstanding first instalment of EUR 600,000 as well as the penalty of EUR 200,000 as referred to in the transfer agreement, and thus set a time limit of ten days to comply with the aforementioned financial obligations.

6. On 9 February 2016, the Claimant lodged a complaint before FIFA against the Respondent explaining that the latter had still not paid the first instalment of the transfer compensation amounting to EUR 600,000, which was allegedly due on 30 September 2015, or replied to the relevant default notice sent to it prior thereto.

7. As a result, the Claimant claimed from the Respondent the amount of EUR 600,000 as the outstanding first instalment as well as the penalty of EUR 200,000 for the default of payment as agreed in the transfer agreement. In addition and in the event the second instalment of EUR 600,000 remained unpaid on the date of the decision, the Claimant requested FIFA to condemn the Respondent to pay the said second instalment of EUR 600,000, as well as the penalty of EUR 200,000 applicable on the second instalment.

Player A

The Claimant further requested 5% interest p.a. as from the due date of each payment as well as all costs of the present proceedings to be borne by the Respondent.

8. In its reply, the Respondent first of all contested the form of the claim. According to the Respondent, the claim was signed and filed by three members of the board of the Claimant, which was administratively dissolved after documents were leaked on the internet for failing to file its annual financial report as per the Statutes of the Football Federation of Country C.

9. In addition, the Respondent challenged the authenticity of the transfer agreement insofar as the latter was apparently signed by the former President, who had no legal capacity, and the financial director, who had no power of attorney.

10. Moreover, the Respondent underlined that the real intention of the parties was to set a one payment transfer fee in the amount of EUR 600,000 and added that the mention of a double instalment was erroneous.

11. As regards the penalty clause of EUR 200,000, the Respondent deemed that it was disproportional and excessive.

12. In view of the abovementioned, the Respondent requested to dismiss the Claimant’s claim.

13. In its replica, the Claimant emphasised that the transfer agreement was valid and binding since it was concluded by authorised signatories on behalf of the Claimant and that, in any case, the burden of proof laid on the Respondent.

14. Moreover, the Claimant alleged that the transfer agreement was drafted in clear terms and had no ambiguous reference regarding the amounts due. In this respect, the Claimant alluded to a correspondence dated 8 November 2015 from the Respondent, according to which the latter admitted being in default of payment of the first instalment, thus implying the existence of a second instalment.

15. As regards the penalty clause, the Claimant rejected the Respondent’s argument and insisted on the principle of contractual freedom, as per Swiss law, being respected.

16. In this context, on 4 November 2016, the Claimant updated its claim, requesting the second instalment of the transfer compensation in the amount of EUR 600,000 as well as the penalty fee of EUR 200,000 on the second instalment, in addition to the first instalment and the penalty fee on the first

Player A instalment. The Claimant further upheld its claim for interest and as to the costs.

17. In its duplica, the Respondent contested the Claimant’s replica insofar as it was signed by Lawyer G, as legal representative of the Claimant, while, according to the Respondent, the Interim Director of the latter club is Director H. In this regard, the Respondent provided an extract from Internet in order to corroborate its allegations.

18. Subsequently, the Respondent evoked the possibility of an amicable settlement, by paying the Claimant the sole amount of EUR 800,000, which the Respondent considered as being an equitable amount.

19. By means of a letter dated 27 April 2017 and received by the FIFA administration on 28 April 2017, i.e. after the closure of the investigation-phase, the Respondent submitted additional comments, in particular pretending that, apparently, it had not received the letter sent by the FIFA administration informing the parties that the investigation was closed in the matter at hand and that the FIFA administration had not taken into account its alleged counter-claim lodged against the Claimant. Moreover, following the notification to the parties by the FIFA administration on 27 April 2017 regarding the appointment of Mr Raymond Hack as Single Judge of the Players’ Status Committee, and based on art. 7 par. 2 of the Procedural Rules, the Respondent challenged the independence and impartiality of the said person, alluding to his participation as a member of the Community M together with Member J who is, according to the Respondent, “the power of the claimant members of directors”.

20. On 2 May 2017, the FIFA administration forwarded to the Respondent the proof of notification of the letter of closure of the investigation-phase dated 22 November 2016. The FIFA administration further informed the Respondent that its latest submission will be submitted to the Single Judge, and that it would be up to the latter to decide whether the additional unsolicited comments would be taken into account.

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

1. First of all, the Single Judge of the Players’ Status Committee (hereinafter: the Single Judge) analysed which edition of the Procedural Rules were applicable to the matter at hand. In this respect, he referred to art. 21 of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (edition 2015) as well as to the fact that the present matter was submitted to FIFA on 9 February 2016. Therefore, the Single Judge concluded that the 2015 edition of the Rules Governing the Procedures of the

Player A

Players’ Status Committee and the Dispute Resolution Chamber (hereinafter: Procedural Rules) is applicable to the matter at hand.

2. Subsequently, the Single Judge analysed which edition of the Regulations on the Status and Transfer of Players is applicable as to the substance of the matter. In this respect, he referred, on the one hand, to art. 26 par. 1 and 2 of the Regulations on the Status and Transfer of Players (edition 2016) and, on the other hand, once again to the fact that the claim was lodged in front of FIFA on 9 February 2016. In view of the foregoing, the Single Judge concluded that the 2015 edition of the Regulations on the Status and Transfer of Players (hereinafter: the Regulations) is applicable to the case at hand as to the substance.

3. In view of the above, the Single Judge confirmed that, on the basis of art. 3 par. 1 and par. 2 of the Procedural Rules in connection with art. 23 par. 1 and par. 3 as well as art. 22 lit. f) of the Regulations, he would in principle be competent to deal with the present matter since it concerns a dispute between clubs affiliated to two different associations.

4. At this point, the Single Judge wished to address Club D’s concerns, as expressed in its letter dated 27 April 2017, with respect to his independence and impartiality. In this respect, the Single Judge pointed out that it is within the nature of a legal procedure that a decision taken by a first instance decision-making body, such as the Single Judge, may be overturned by another decision-making body in appeal, such as the Court of Arbitration for Sport. Equally, the mere fact that the person adjudicating on the relevant affair was a member of the Community M as well as Member J, supposedly involved in the Claimant’s members of directors, cannot legitimately be considered as a lack of independence on the side of the Single Judge. This is, in particular, if the Single Judge had no direct influence on the composition of the Community M. The aforementioned concerns cannot lead by any means to the conclusion that a legitimate doubt exists as to the independence and impartiality of the Single Judge.

5. 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 arguments and the documentation submitted by the parties. 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.

6. Along those lines, the Single Judge started by addressing the argument invoked by the Respondent in relation to the alleged procedural mistakes of the FIFA administration in the case-handling of the present matter, i.e. not

Player A having notified the letter closing the investigation and not having taken into account the Respondent’s alleged counterclaim. In this respect, the Single Judge wished to outline that the letter, by means of which the FIFA administration informed the parties at stake that the investigation-phase was closed, was duly notified by facsimile on 22 November 2016 to the relevant parties, including the Respondent, as explained in the correspondence addressed by the FIFA administration to the Respondent on 2 May 2017.

7. As to the Respondent’s allegations relating to the lack of consideration of its alleged counterclaim, the Single Judge highlighted that the documentation on file does not allude to any counterclaim possibly lodged by the Respondent in front of the FIFA administration pertaining to the present matter. Indeed, the Single Judge underlined that the Respondent’s comments, submitted on 5 September 2016 and on 20 November 2016 as to the case at hand, do not refer to or provide for documentation relating to a counterclaim of the Respondent against the Claimant, such as a specific monetary request or the proof of payment of the advance of costs for lodging said counter-claim as per art. 9 par.1 of the Procedural Rules. Therefore, and in the absence of any proof to the contrary, the Single Judge considered that the present matter was rightfully submitted for consideration and decision by the FIFA administration.

8. The Single Judge further took note that the Respondent disputed the legal capacity and absence of power of representation of the persons having signed the claim lodged before FIFA on behalf of the Claimant and the transfer agreement at the basis of the present dispute. In this regard, the Single Judge referred to art. 12 par. 3 of the Procedural Rules, which stipulates that any party claiming a right on the basis of an alleged fact shall carry the burden of proof. Bearing in mind the above, the Single Judge considered that the Respondent did not provide any conclusive evidence in support of the above-mentioned allegations. Even more, the Single Judge could not think of a more legitimised person than the President of the Claimant himself to sign said transfer agreement on behalf of the club. In fact, the Single Judge regarded the Respondent’s entire line of argumentation as a mere attempt to avoid the payment of the relevant transfer compensation in accordance with the transfer agreement.

9. As a result, and in view of the fact that the Respondent did not provide any valid argument which would justify the non-payment of the agreed transfer compensation, the Single Judge concluded that the Respondent had failed to respect the terms of the transfer agreement it had entered into with the Claimant on 22 August 2015.

10. Consequently, the Single Judge held that, in accordance with the basic legal principle of pacta sunt servanda, which in essence means that agreements must be respected by the parties in good faith, the Respondent has to fulfill its

Player A contractual obligations towards the Claimant. Therefore, the Single Judge decided that the Respondent has to pay the Claimant the amount of EUR 1,200,000 as transfer fee for the transfer of the player.

11. Subsequently, the Single Judge addressed the additional request of the Claimant for a penalty fee amounting to EUR 400,000. In this respect, the Single Judge observed that the penalty fee was stipulated in the transfer agreement and that, as mentioned previously, the Respondent delayed the payment of the transfer compensation without a legitimate reason. Notwithstanding the above, and after analysing the relevant provision in the transfer agreement, the Single Judge was of the opinion that a penalty fee amounting to EUR 400,000, i.e. around 35% of the outstanding transfer fee, was to be considered disproportionate and excessive in accordance with his well-established jurisprudence, and as such, could not be enforced. In the alternative, the Single Judge decided to reduce it to the amount of EUR 250,000.

12. As to the Claimant’s claim relating to 5% interest p.a., and in consideration of the above-mentioned point II.11 and the well-established jurisprudence of the Players’ Status Committee, the Single Judge decided to reject such request insofar as the parties did not seem to have contractually agreed upon a default interest in addition to the aforementioned penalty fee.

13. As a conclusion, the Single Judge decided that the claim of the Claimant was partially accepted. Therefore, the Respondent has to pay the Claimant the amount of EUR 1,200,000 as outstanding transfer compensation, plus EUR 250,000 as penalty fee.

14. At last, 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 proceedings before the Players’ Status Committee including its 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 (cf. art. 18 par. 1 of the Procedural Rules).

15. In respect of the above, and taking into account that the Claimant is the successful party in the present proceedings, the Single Judge concluded that the Respondent has to bear the full costs of the current proceedings before FIFA.

16. 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. On that basis, the Single Judge held that the amount to be taken into consideration in the present proceedings is EUR 1,600,000. Consequently, the

Player A

Single Judge concluded that the maximum amount of costs of the proceedings corresponds to CHF 25,000.

17. In conclusion, taking into account the degree of success as well as the complexity of the case and the fact that the Respondent has been found liable for the violation of the transfer agreement for the second time, the Single Judge of the Players’ Status Committee determined the costs of the proceedings to the amount of CHF 20,000, which shall be borne by the Respondent.

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

1. The claim of the Claimant, Club B, is admissible.

2. The claim of the Claimant, Club B, is partially accepted.

3. The Respondent, Club D, has to pay to the Claimant, Club B, within 30 days as from the date of notification of this decision, the outstanding amount of EUR 1,200,000.

4. The Respondent, Club D, has to pay to the Claimant, Club B, within 30 days as from the date of notification of this decision, the amount of EUR 250,000 as penalty.

5. In the event that the amounts foreseen above are not paid within the stated time limit, interest at the rate of 5% p.a. will fall due as of expiry of the aforementioned time limits and the present matter shall be submitted, upon request, to the FIFA Disciplinary Committee for consideration and a formal decision.

6. Any other claims lodged by the Claimant, Club B, are rejected.

7. The final costs of the proceedings in the amount of CHF 20,000 are to be paid by the Respondent, Club D, within 30 days as from the date of notification of the present decision, as follows:

7.1 The amount of CHF 15,000 has to be paid directly to FIFA to the following bank account with reference to case nr.: XXX

UBS Zurich

Account number 366.677.01U (FIFA Players’ Status)

Clearing number 230

IBAN: CH27 0023 0230 3666 7701U

SWIFT: UBSWCHZH80A

Player A

7.2 The amount of CHF 5,000 has to be paid directly to the Claimant, Club B.

8. The Claimant, Club B, is directed to inform the Respondent, Club D, immediately and directly of the account number to which the remittances under points 3., 4. and 7.2 are to be made and to notify the Players’ Status Committee of every payment received.

*****

Note relating to the motivated decision (legal remedy):

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, a copy of which we enclose hereto. 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 Single Judge of the

Players’ Status Committee

Omar Ongaro

Football Regulatory Director

Encl. CAS Directives