F.I.F.A. – Players’ Status Committee / Commissione per lo Status dei Calciatori – club vs club disputes / controversie tra società – (2017-2018) – fifa.com – atto non ufficiale – Decision 29 August 2017

Decision of the Single Judge

of the Players’ Status Committee

passed in Zurich, Switzerland, on 29 August 2017,

by

Geoff Thompson (England)

Single Judge of the Players’ Status Committee,

on the claim presented by the club

Club A, Country B

as “Claimant”

against the club

Club C, Country D

as “Respondent”

regarding a contractual dispute between the parties

relating to the player, Player E

Player E

I. Facts of the case

1. On 18 July 2016, the Club of Country B, Club A (hereinafter: the Claimant) and the Club of Country D, Club C (hereinafter: the Respondent) concluded a loan agreement (hereinafter: the agreement), valid from its date of signature until 31 December 2016 and by means of which the Claimant would temporarily transfer the Player, Player E (hereinafter: the player) to the Respondent, upon payment of a loan fee in the amount of EUR 850,000, payable in seven instalments, as follows:

- “EUR 250,000 until 31 July 2016

- EUR 100,000 on 10 August 2016

- EUR 100,000 on 10 September 2016

- EUR 100,000 on 10 October 2016

- EUR 100,000 on 11 October 2016

- EUR 100,000 on 12 October 2016

- EUR 100,000 on 10 January 2017”.

2. Article 3.2 of the agreement stated that “[i]n case of delay in the payment of any instalment above, [the Respondent] shall be liable to pay [the Claimant] a penalty of 10% per month or part thereof on the amount due”.

3. On 8 October 2016 with amendments made on 15 November 2016 and 12 December 2016, the Claimant lodged a claim against the Respondent in front of FIFA alleging that the latter did not comply with its contractual duties and failed to pay the instalments of the loan fee in accordance with the agreement.

4. In this respect, the Claimant provided FIFA with a correspondence dated 19 July 2016 in which the Respondent acknowledged the outstanding payments amounting to EUR 850,000 “as per the schedule of the payments”.

5. Furthermore, the Claimant explained that, by means of three letters dated 10 August 2016, 4 September 2016 and 21 September 2016, it reminded the Respondent of the allegedly outstanding amount of EUR 850,000 setting a time limit of fifteen days to remedy the default. The Claimant further explained that, following the default notices, it did not receive any payment from the Respondent.

6. Consequently, the Claimant requested from the Respondent the allegedly outstanding amount of EUR 850,000 corresponding to the loan fee and the amount of EUR 300,000 as penalty in accordance with article 3.2 of the agreement as well as legal and proceeding costs to be borne by the latter.

7. In its reply to the claim lodged against it, the Respondent contested the claim in its entirety.

8. First of all, the Respondent alleged that “all Banks of Country D remained under strike during the period between 06 September and 07 October 2016” and invoked in this respect a case of “force majeure”.

9. The Respondent further alleged that the Claimant failed to provide the Respondent with the entitled invoices and bank account details in order to pay the instalments.

10. Finally, the Respondent explained that the penalty of 10% per month as stipulated in article 3.2 of the agreement violates the jurisprudence of the Players’ Status Committee being excessive and, therefore, invalid.

11. In its replica, the Claimant contested the arguments invoked by the Respondent and maintained its position.

12. Furthermore, the Claimant amended its claim and requested a total outstanding amount of EUR 445,000 as penalty, or alternatively, only in the event that this amount is rejected, “a delay penalty of EUR 212,000 corresponding to quarter of the principal amount of EUR 850,000”, or “a delay penalty of 17% per annum on the total outstanding amount of EUR 850,000 as the maximum rate that can be granted without violating Swiss public policy”. Finally, the Claimant also requested FIFA to impose sanctions on the Respondent.

13. In its duplica, the Respondent reiterated its position.

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 which edition of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (hereinafter: Procedural Rules) was applicable to the matter at hand. In this respect, considering that the present matter was submitted to FIFA on 8 October 2016, the Single Judge concluded that the 2015 edition of the Procedural Rules is applicable in the matter at hand (cf. art. 21 of the 2015 and 2017 editions of the Procedural Rules).

2. Subsequently, the Single Judge analysed which edition of the Regulations on the Status and Transfer of Players (hereinafter: “the Regulations”) should be applicable as to the substance of the matter. In this respect, he confirmed that the present matter was submitted to FIFA on 8 October 2016 and, therefore, concluded that the 2016 edition of the Regulations is applicable in the matter at hand as to the substance (cf. art. 26 par. 1 and par. 2 of the Regulations).

3. With regard to his competence, the Single Judge confirmed that on the basis of art. 3 par. 1 and 2 of the Procedural Rules in connection with art. 23 par. 1 and 4 as well as art. 22 lit. f) of the 2016 edition of the Regulations on the Status and Transfer of Players he is competent to deal with the matter at stake, which concerns a dispute between two football clubs affiliated to two different associations.

4. His competence and the applicable regulations having been established and entering into the substance of the matter, the Single Judge started his analysis by acknowledging the facts of the case and the arguments of the parties as well as the documents 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 that he considered pertinent for the assessment of the matter at hand.

5. In doing so and to begin with, the Single Judge acknowledged that on 18 July 2016, the Claimant and the Respondent concluded an agreement in relation with the loan of the player, by means of which the Respondent undertook to pay the Claimant a loan fee in the amount of EUR 850,000 in seven instalments as follows:

- “EUR 250,000 until 31 July 2016

- EUR 100,000 on 10 August 2016

- EUR 100,000 on 10 September 2016

- EUR 100,000 on 10 October 2016

- EUR 100,000 on 11 October 2016

- EUR 100,000 on 12 October 2016

- EUR 100,000 on 10 January 2017”.

6. On the one hand, the Single Judge noted that the Claimant maintained being entitled to receive from the Respondent the outstanding amount of EUR 850,000, indicating that the latter had not yet paid any instalments of the loan fee that respectively fell due on 31 July 2016, 10 August 2016, 10 September 2016, 10 October 2016, 11 October 2016, 12 October 2016 and 10 January 2017. In view of the above, the Claimant referred to the agreement and claimed from the Respondent the amount of EUR 850,000 corresponding to the loan fee, the amount of EUR 445,000 as penalty based on article 3.2 of the agreement, or alternatively, only in the event that this amount is rejected, “a delay penalty of EUR 212,000 corresponding to quarter of the principal amount of EUR 850,000”, or “a delay penalty of 17% per annum on the total outstanding amount of EUR 850,000 as the maximum rate that can be granted without violating Swiss public policy” as well as legal and procedural costs to be borne by the Respondent.

7. Furthermore, the Single Judge took into account the fact that the Claimant provided FIFA with a correspondence dated 19 July 2016 by means of which the Respondent acknowledged the outstanding payments amounting to EUR 850,000.

8. On the other hand, with regard to the payment of the instalments of the loan fee, the Single Judge observed that, for its part, the Respondent contested the allegations of the Claimant, alleging that “all Banks of Country D remained under strike during the period between 06 September and 07 October 2016” invoking in this respect a case of “force majeure” and further alleged that the Claimant failed to provide it with the entitled invoices and bank account details in order to pay the instalments. Furthermore, the Respondent maintained that the penalty of 10% per month as stipulated in article 3.2 of the agreement, violates the jurisprudence of the Players’ Status Committee being excessive and, therefore, should be considered as invalid.

9. At this stage, the Single Judge referred to art. 12 par. 3 of the Procedural Rules according to which any party claiming a right on the basis of an alleged fact shall carry the burden of proof.

10. In doing so, the Single Judge thoroughly analyzed the documents on file and, in particular, the content of the documentation submitted by the parties. In this regard, first of all, the Single Judge recalled that according to the agreement, the Claimant was not obliged to send invoices to the Respondent.

11. Secondly, the Single Judge took into account that, for its part, the Claimant actually sent several default notices including bank details to the Respondent respectively on 10 August 2016, 4 September 2016 and 21 September 2016.

12. As a result, considering the legal principle of burden of proof as well as the argumentation and documentation presented by both parties, the Single Judge deemed that the Respondent did not have any valid argument and decided to reject the latter’s position and argumentation.

13. In continuation, turning his attention to the Claimant’s request amounting to EUR 850,000 corresponding to the payment of the loan fee in accordance with the agreement, the Single Judge emphasised that it was undisputed that such amount had not been paid by the Respondent and was, therefore, still due. Consequently, the Single Judge considered, that, in the present case, it remained uncontested that the Claimant was contractually entitled to receive from the Respondent the total amount corresponding to the loan fee, i.e. EUR 850,000.

14. Bearing in mind the aforementioned and the basic legal principle of pacta sunt servanda, which in essence means that agreements must be respected by the parties in good faith, the Single Judge concluded that the Respondent had breached its contractual obligations towards the Claimant and should, as a consequence, be liable to pay the outstanding amount of EUR 850,000.

15. Having established the above, the Single Judge continued his deliberations by examining the Claimant’s second request, i.e. the amount of EUR 445,000 based on article 3.2 of the agreement.

16. In this regard, the Single Judge focussed his attention to the content of article 3.2 of the agreement concluded between the parties which stipulated that, “[i]n case of delay in the payment of any instalment above, [the Respondent] shall be liable to pay [the Claimant] a penalty of 10% per month or part thereof on the amount due”.

17. In this respect, the Single observed that in its statement of defence, the Respondent challenged the Claimant’s entitlement to a default penalty of 10% per month for late payment as being excessive and therefore invalid according to the jurisprudence of the Players’ Status Committee.

18. In continuation and with regard to the Claimant’s request for a penalty amounting to EUR 445,000, the Single Judge first highlighted that such penalty constitutes nothing more than an interest rate as it is open ended, i.e. 10 % per month as stipulated in the contract, although the parties may call it a penalty fee.

19. Secondly, the Single Judge recalled that interest at a rate of 10% per month for late payment, corresponding to interest at a rate of 120% per year, is to be considered as manifestly disproportionate and excessive, and as such, cannot be enforced. In view of the foregoing, the Single Judge held that the contractual rate of article 3.2 of the agreement should be disregarded and that, as an alternative, taking into account the longstanding practice of the Players’ Status Committee, the Single Judge concluded that the Respondent has to pay 5% default interest p.a. on the respective outstanding instalments as of the relevant due dates until the date of effective payment.

20. Consequently, the Single Judge ruled that the relevant request of the Claimant had to be rejected and, taking into account the constant practice of the Players’ Status Committee, decided to grant interest at a rate of 5% p.a. as follows :

- 5% p.a. over the amount of EUR 250,000 as from 1 August 2016 until the date of effective payment;

- 5% p.a. over the amount of EUR 100,000 as from 11 August 2016 until the date of effective payment;

- 5% p.a. over the amount of EUR 100,000 as from 11 September 2016 until the date of effective payment;

- 5% p.a. over the amount of EUR 100,000 as from 11 October 2016 until the date of effective payment;

- 5% p.a. over the amount of EUR 100,000 as from 12 October 2016 until the date of effective payment;

- 5% p.a. over the amount of EUR 100,000 as from 13 October 2016 until the date of effective payment;

- 5% p.a. over the amount of EUR 100,000 as from 11 January 2017 until the date of effective payment.

21. In conclusion, the Single Judge decided that the claim of the Claimant is partially accepted and held that the Respondent has to pay to the Claimant the amount of EUR 850,000 as outstanding loan fee, plus interest at a rate of 5% p.a. over the above-mentioned amounts as of the relevant due dates until the date of effective payment and that any further claims lodged by the Claimant are rejected.

22. Lastly, 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 its Single Judge, costs in the maximum amount of CHF 25,000 are levied. 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).

23. In respect of the above, and taking into account that the Claimant’s claim was partially accepted, the Single Judge concluded that both the Claimant as well as the Respondent have to bear a part of the costs of the current proceedings before FIFA.

24. 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. Consequently and taking into account that the total amount at dispute in the present matter is over CHF 200,001, the Single Judge concluded that the maximum amount of costs of the proceedings corresponds to CHF 25,000.

25. In conclusion, and considering the particularities of the present matter, the Single Judge determined the costs of the current proceedings to the amount of CHF 20,000. Furthermore, and in line with his aforementioned considerations and taking into account the degree of success, the Single Judge decided that the amount of CHF 5,000 has to be paid by the Claimant and the amount of CHF 15,000 by the Respondent.

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

1. The claim of the Claimant, Club A, is partially accepted.

2. The Respondent, Club C, has to pay to the Claimant, Club A, within 30 days as from the date of notification of this decision, the amount of EUR 850,000 as outstanding loan fee, plus interest as follows:

- 5% p.a. over the amount of EUR 250,000 as from 1 August 2016 until the date of effective payment;

- 5% p.a. over the amount of EUR 100,000 as from 11 August 2016 until the date of effective payment;

- 5% p.a. over the amount of EUR 100,000 as from 11 September 2016 until the date of effective payment;

- 5% p.a. over the amount of EUR 100,000 as from 11 October 2016 until the date of effective payment;

- 5% p.a. over the amount of EUR 100,000 as from 12 October 2016 until the date of effective payment;

- 5% p.a. over the amount of EUR 100,000 as from 13 October 2016 until the date of effective payment;

- 5% p.a. over the amount of EUR 100,000 as from 11 January 2017 until the date of effective payment.

3. If the aforementioned sum, plus interest (point 2) is not paid within the stated time limit, the present matter shall be submitted, upon request, to FIFA’s Disciplinary Committee for consideration and a formal decision.

4. Any further claims lodged by the Claimant, Club A, are rejected.

5. The final costs of the proceedings in the amount of CHF 20,000 are to be paid within 30 days as from the date of notification of this decision, as follows:

5.1 The amount of CHF 5,000 has to be paid by the Claimant, Club A, to FIFA. Given that the Claimant, Club A, has already paid the amount of

CHF 5,000 as advance of costs at the start of the present proceedings, the latter is exempted to pay the cited amount.

5.2 The amount of CHF 15,000 has to be paid by the Respondent, Club C, 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

6. The Claimant, Club A, is directed to inform the Respondent, Club C, immediately and directly of the account number to which the remittance under point 2 above is to be made and to notify the Single Judge of the Players’ Status Committee of every payment received.

*****

Note relating to the motivated decision (legal remedy):

According to art. 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