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 5 June 2018

Decision of the Single Judge

of the Players’ Status Committee

passed in Zurich, Switzerland, on 5 June 2018,

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 arisen between the parties

and relating to the player, Player E

Player E

I. Facts of the case

1. On 25 July 2017, the club of Country B, Club A (hereinafter; Club A or the Claimant), and the club of Country D, Club C (hereinafter; Club C or the Respondent), concluded a transfer agreement for the definitive transfer of the player of Country F, Player E (hereinafter; the player), from Club A to Club C. The aforesaid transfer agreement was signed by the Claimant, the Respondent and the player and its date of signature is stated as 23 July 2017.

2. Furthermore, it was stipulated in the transfer agreement that its object was:

1) “Club A hereby irrevocably commits to transfer the Player to [Club C] on a permanent basis.

2) [Club C] hereby irrevocably commits to sign the Player from Club A on a Permanent basis.

3) The Player irrevocably commits to and accepts his permanent transfer from Club A to [Club C].”.

3. According to art 2.1. of the transfer agreement, Club C committed to pay to Club A a transfer compensation of USD 1,600,000, “net without any deductions of solidarity contribution”, amount which was payable in 4 instalments as follows:

 USD 100,000 by 31 August 2017;

 USD 500,000 by 28 February 2018;

 USD 500,000 by 31 August 2018;

 USD 500,000 by 28 February 2019.

4. In this respect, the transfer agreement in its art. 2.2 stipulated that: “Failing by [Club C] to respect any instalment under point 2.1 above, will result in the entire Transfer Amount being due immediately.”.

5. Moreover, the transfer agreement provided that “any solidarity contribution that shall be distributed by [Club C] according to art. 21 and Annexe 5 of the FIFA Regulations on the Status and Transfer of Players shall be borne by [Club C] and paid in addition to the Permanent Transfer Amount.”.

6. The transfer agreement established that “the Parties commit to stipulate and undersign all official documents required by Football Federation of Country B, Football Federation of Country D, FIFA, as well as by and other entitled body for the full validity and execution of this Agreement.”.

7. According to the information contained in the Transfer Matching System (TMS), the player was registered with Club C on 4 August 2017.

8. On 23 August 2017, Club C lodged a claim in front of FIFA’s Dispute Resolution Chamber against the player, the club of Country G, Club H (hereinafter: Club H) and Club A for breach of contract. In its claim, Club C maintained inter alia that the player failed to fulfil his contractual obligations towards it, and that Club H and Club A had induced the player to terminate the employment relationship with Club C.

9. By means of a letter dated 28 August 2017, Club C informed Club A that it “will not pay directly to Club A the respective instalments stipulated in clause 2.1. of the Transfer Agreement. On the contrary, as a sign of good faith, Club C will deposit - when applicable - the respective amounts in the bank account of the Football Federation of Country D and therefore Club A shall be entitled to perceive the aforesaid sums when 1) the contractual dispute has been resolved; (ii) if Club A is acquitted of all charges and (iii) the Transfer Agreement is not declared void an null.”.

10. According to the information contained in the TMS, on 31 July 2017, the player signed an employment contract with Club H, valid until 30 June 2021.

11. On 1 September 2017, the Claimant sent an invoice to the Respondent in respect of the first instalment of the transfer agreement in the amount of USD 100,000, amount which was payable by 31 August 2017.

12. Subsequently, on 2 September 2017, Club A put Club C in default of payment requesting the amount of USD 1,600,000, i.e. the entire transfer compensation, while referring to art. 2.2. of the transfer agreement. Club A granted Club C a time limit expiring on 12 September 2017 to remedy the default.

13. Furthermore, according to the information contained in the TMS, on 28 September 2017, Club H was authorized by FIFA to provisionally register the player, after the decision taken by the Single Judge of FIFA’s Players’ Status Committee on 26 September 2017.

14. On 15 September 2017, Club A lodged a claim in front of FIFA’s Players’ Status Committee against Club C in respect to the non-payment by Club C of the transfer compensation agreed upon by the Claimant and the Respondent for the permanent transfer of the player. In this respect, Club A referred to art. 2.2. of the transfer agreement and maintained that since Club C did not pay the first instalment as agreed in the transfer agreement, the entire transfer compensation has fallen due.

15. As a result, Club A requested to be awarded USD 1,600,000, plus 5% interest p.a. as from 31 August 2017. Club A also requested the imposition of sanctions on Club C pursuant to art.12bis of FIFA’s Regulations on the Status and Transfer of Players and that Club C bears the costs of the present proceedings.

16. In its claim, Club A held that it has performed all of its obligations in accordance with the transfer agreement and that the player has been transferred to Club C.

17. Moreover, according to Club A, Club C has involved Club A in its claim before FIFA’s Dispute Resolution Chamber against the player and Club H for breach of contract, “in order to create an artificial justification aimed at postponing the payment due to Club A…”. Club A held that by lodging a claim against the player for breach of contract, Club C has considered the transfer agreement valid and binding, otherwise it would, allegedly, not have a contractual basis for its respective claim. Club A insisted that Club C has no contractual basis to postpone the overdue payments.

18. In reply to Club A’s claim, Club C rejected said claim. In this context, Club C held that it “is complying in a strict manner with its obligations in accordance with the transfer agreement”, and that due to the “exceptional circumstances” regarding the execution of the transfer agreement, it has deposited the amount USD 100,000 at the Football Federation of Country D, amount which corresponds to the first instalment in accordance with the transfer agreement, and sustained that the reason why Club A has not received said amount directly, is because Club C “has seen itself obliged” to start legal actions against Club A, in respect of the alleged inducement from Club A on the player to breach his contractual obligations with Club C.

19. Furthermore, regarding the applicability of art. 12bis of the Regulations, Club C highlighted that Club A’s default notice was not sent after the claimed amounts had been allegedly due for more than 30 days.

20. Additionally, Club C argued that the “spirit and essence” of the transfer agreement is that Club C is in a position to field the player and to benefit from his professional services, which it has been unable to do. In this regard, Club C requested the suspension of the execution of the transfer agreement until the employment related dispute with the player has been resolved and to merge the present case with the case pending before the Dispute Resolution Chamber.

21. In its replica, Club A reiterated its arguments and insisted that whereas it has duly complied with its corresponding obligations in accordance with the transfer agreement, Club C, on the other hand, has not fulfilled its respective obligations. Moreover, the Claimant held that the proceedings involving the parties should not be merged since they are pending before different deciding bodies and have different purposes.

22. In its duplica, Club C ratified its position. Moreover, Club C requested, in a subsidiary manner, to consider the transfer agreement null since the player has signed with Club H, and as a result Club C has not been able to field the player and to benefit from his professional services.

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 15 September 2017, the Single Judge concluded that the 2017 edition of the Procedural Rules is applicable in the matter at hand (cf. art. 21 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 15 September 2017 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 2016 and 2018 editions 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. In particular, the Single Judge recalled that in accordance with art. 6 par. 3 of Annexe 3 of the Regulations, FIFA may use, within the scope of proceedings pertaining to the application of the Regulations, any documentation or evidence generated or contained in the Transfer Matching System (TMS).

5. In doing so and to begin with, the Single Judge acknowledged that on 25 July 2017, the Claimant and the Respondent concluded the transfer agreement, to which the player was also a party, in relation with the permanent transfer of the player from Club A to Club C, by means of which, in accordance with its art. 2.1, the Club C undertook the obligation to pay to Club A a transfer compensation fee in the amount of USD 1,600,000, amount which was payable in separate 4 instalments due as follows:

 USD 100,000 by 31 August 2017;

 USD 500,000 by 28 February 2018;

 USD 500,000 by 31 August 2018;

 USD 500,000 by 28 February 2019.

6. In continuation, the Single Judge took note of the content of article 2.2 of the transfer agreement which states that, “Failing by [Club C] to respect any instalment under point 2.1 above, will result in the entire Transfer Amount being due immediately.”.

7. Furthermore, the Single Judge carefully considered that in accordance with what was stipulated in the transfer agreement, its object was:

1) “Club A hereby irrevocably commits to transfer the Player to [Club C] on a permanent basis.

2) [Club C] hereby irrevocably commits to sign the Player from Club A on a Permanent basis.

3) The Player irrevocably commits to and accepts his permanent transfer from Club A to [Club C].”.

8. On the one hand, the Single Judge noted that Club A maintained being entitled to receive from Club C the outstanding amount of USD 1,600,000, indicating that the latter had not yet paid any the first instalment of the transfer compensation that fell due on 31 August 2017. In view of the above, the Claimant referred to art. 2.2. of the transfer agreement and maintained that since Club C did not pay the first instalment as agreed in the transfer agreement, the entire transfer compensation has fallen due and as result claimed from the Respondent the amount of USD 1,600,000, plus 5% interest p.a. as from 31 August 2017 until the date of effective payment. Moreover, the Single Judge duly observed that Club A sustained that it has performed all of its obligations towards Club C arising from the transfer agreement and that the player was in fact transferred to the latter.

9. Furthermore, the Single Judge noted that the Claimant requested the imposition of sanctions on Club C pursuant to art.12bis of the Regulations. At this early stage, the Single Judge considered appropriate to highlight that since Club A itself deems that the requested amount fell due on 31 August 2017, its default notice of 2 September 2017, does not meet the requirements of art. 12bis par. 3, since the amount would not have been due on this date for more than 30 days without a prima facie contractual basis in accordance with art. 12bis par. 2.

10. On the other hand, the Single Judge observed that, for its part, Club C held that it is complying in a strict manner with its obligations in accordance with the transfer agreement with Club A, explaining that due to the “exceptional circumstances”, Club A has not received the amounts directly, since it “has seen itself obliged” to start legal actions against the latter. Moreover, the Single Judge duly took note that Club C argued that the “spirit and essence” of the transfer agreement is that Club C is in a position to field the player and to benefit from his professional services, which it has been unable to do as the player did not render his services to Club C and signed with Club H instead. Finally, Club C requested, in a subsidiary manner, to consider the transfer agreement null as a result.

11. Equally, the Single Judge observed that Club C has referred to its claim lodged in front of FIFA’s Dispute Resolution Chamber against the player, Club H and Club A regarding the player’s alleged reach of contract. In this regard, the Single Judge considered that in view of said parallel proceeding - identified with the case ref. no. XXX - which concern an employment-related dispute with an international dimension between a club of Country D, a player of Country F a club of Country G, as well as a club of Country B, on the basis of art. 3 par. 1 of the Procedural Rules in connection with art. 24 par. 1 in combination with art. 22 lit. b of the Regulations, it is within the scope of said deciding body to deal with the relevant aspects of the employment-related dispute between to the aforementioned parties.

12. On account of the above, the Single Judge considered that since it remains uncontested that Club C has not paid the first instalment of the transfer compensation due on 31 August 2017 to Club A, he first has to determine if there is a valid reason for Club C not to have paid said instalment or if the transfer agreement has to be considered null as claimed by Club C.

13. In this context, the Single Judge emphasised the transfer agreement did not contain any conditions that would need to be fulfilled in order for the transfer agreement to become binding upon Club A and Club C. In particular, the Single Judge found important to highlight that the transfer agreement does not contain an explicit clause which makes the validity of the transfer agreement subject to the conclusion of a valid employment contract between Club C and the player.

14. In continuation, the Single Judge outlined that the obligation of payment of the transfer compensation as stipulated in the transfer agreement is independent from any obligation that the player might have had towards Club C on the basis of an employment contract. Therefore, the Single Judge concluded that regardless of any breach from the player in detriment to Club C, such breach, if any, cannot dispense Club C from fulfilling its obligations towards Club A, in accordance with the transfer agreement freely concluded between these two clubs. As a consequence, the Single Judge rejected the arguments of Club C in this regard and decided that the transfer agreement has to be considered as valid and binding upon Club A and Club C.

15. Moreover, the Single Judge referred to art. 6 par. 3 of Annexe 3 of the Regulations and pointed out that the player was, in fact, registered with Club C on 4 August 2017 in accordance with the information contained in the TMS.

16. Having established that the transfer agreement was validly concluded between Club C and Club A, the Single Judge was of the opinion that there is no valid reason for the Respondent to justify the non-payment of the amounts stipulated in the transfer agreement, and that Club C must fulfil its respective contractual obligations towards Club A, in accordance with the principle of pacta sunt servanda.

17. At this stage, the Single Judge acknowledged that it was undisputed between the parties that first instalment for the amount of USD 100,000 had not been paid by the Club C within the deadline established in the transfer agreement i.e. 31 August 2017.

18. Then, the Single Judge took due note of the content of the acceleration clause contained in art 2.2. of the transfer agreement, which reads “Failing by [Club C] to respect any instalment under point 2.1 above, will result in the entire Transfer Amount being due immediately.”. Against such background, the Single Judge deemed that as a consequence of the non-payment of first instalment within the deadline established for it, i.e. 31 August 2017, the full amount of transfer compensation as stipulated in the transfer agreement has fallen due.

19. Bearing in mind the aforementioned, the Single Judge concluded that Club C had breached its contractual obligations towards Club A and should, as a consequence, be liable to pay the full amount of the transfer compensation in accordance with the transfer agreement concluded between the parties, i.e. the amount of USD 1,600,000.

20. In continuation and in view of the Claimant’s request for interest at a rate of 5% p.a. on the above-mentioned amount until the date of effective payment and in line with the well-established jurisprudence of the Players’ Status Committee, the Single Judge decided to grant interest at a rate of 5% p.a. on the aforementioned amount, i.e. USD 1,600,000, as from 1 September 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 Club A the amount of USD 1,600,000 as outstanding transfer fee as well as interest at a rate of 5% p.a. over said amount as from 1 September 2017 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 and the 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 and are normally to be paid by the unsuccessful party.

23. Taking into account that the responsibility of the failure to comply with the payment of the transfer compensation can entirely be attributed to Club C and that the claim of the Claimant has been partially accepted, the Single Judge concluded that the Respondent has to bear the costs of the current proceedings before FIFA. 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 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.

24. In conclusion, and considering the specificities of the present matter as well as that the Claimant is the successful party, the Single Judge determined the costs of the current proceedings to the amount of CHF 15,000 to be borne 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, within 30 days as from the date of notification of the present decision, the total amount of USD

1,600,000, plus 5% interest p.a. on the said amount from 1 September 2017 until the date of effective payment.

3. If the aforementioned sum, plus interest as established above, is not paid within the aforementioned deadline, the present matter shall be submitted, upon request, to FIFA’s Disciplinary Committee for consideration and a formal decision.

4. Any other claims lodged by the Claimant are rejected.

5. The final costs of the proceedings in the amount of CHF 15,000 are to be paid by the Respondent, within 30 days as from the date of notification of the present decision, as follows:

5.1. The amount of CHF 10,000 has to be paid 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

5.2. The amount of CHF 5,000 has to be paid directly to the Claimant.

6. The Claimant is directed to inform the Respondent immediately and directly of the account number to which the remittances under points 2. and 5.2. 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 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