F.I.F.A. – Players’ Status Committee / Commissione per lo Status dei Calciatori – club vs club disputes / controversie tra società – (2018-2019) – fifa.com – atto non ufficiale – Decision 19 September 2018

Decision of the Single Judge

of the Players’ Status Committee

passed in Zurich, Switzerland, on 19 September 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 between the parties

relating to the player, Player F

I. Facts of the case

1. On 20 February 2017, the Club of Country B, Club A (hereinafter: the Claimant), and the Club of Country D, Club C (hereinafter: the Respondent), concluded a transfer agreement (hereinafter: the transfer agreement) for the definitive transfer of the Player of Country E, Player F (hereinafter: the player), from Club A to Club C.

2. Clause 2.1 of the transfer agreement reads as follows:

“In consideration of the transfer of the Player’s registration, [the Respondent] agrees to pay [the Claimant], subject to and in accordance with the terms hereof the net amount of EUR 11.000.000 (ELEVEN MILLIONS EURO), hereinafter referres as Guaranteed Transfer Fee which shall be paid in two (2) instalments as follows:

€ 6,600,000 upon the transfer of Player’s ITC, no later than 5th March 2017 and; € 4,400,000 on or before 5th January 2018”.

3. Clause 2.2. of the transfer agreement stipulates that:

"In addition to the Guaranteed Transfer Fee, [the Respondent] agrees to pay [the Claimant] subject to and in accordance with the terms hereof, the following contingent transfer fees (each as “Contingent Transfer Fee”):

(i) €1.000.000 (ONE MILLION Euros) net in the event that the player scores twelve (12) goals during the Player’s registration with [the Claimant] in Official Games (LEAGUE G,LEAGUE H,LEAGUE J); and

(ii) €1.000.000 (ONE MILLION Euros) net in the event that the player scores another twelve (12) goals during the Player’s registration with [the Respondent] in Official Games (LEAGUE G, LEAGUE H, LEAGUE J)

[…]”.

4. In accordance with clause 2.5 of the transfer agreement “it is explicitly agreed that in case of the Player’s transfer to a third Club before 28th February 2019 the total net amount to be received from [the Claimant] under clause 2.2 shall become immediately due and payable irrespective if the conditions are met”.

5. Furthermore, clause 4.2 of the transfer agreement provides that:

“In case that [the Respondent] delays more than five (5) days the 2nd instalment of the Guaranteed transfer fee under clause 2.1 which is agreed to be payable on 5th January 2018 or any of the Contingent Transfer Fees then:

(i) [The Respondent] shall be liable to pay a penalty clause equal to the 25% of the total unpaid sum which [the Respondent] acknowledges and considers as proportional, fair and just, and additionally; (ii) An interest shall accrue on the sum due and payable to [the Claimant] hereunder at the rate of fifteen percent (15%) from the date of such default to the actual date of payment.

All the aforesaid consequences are cumulative and both parties acknowledge and consider them as fair, just and proportional since the Player is [the Claimant’s] most valuable Player and departs from the latter after the closure of the transfer window thus he cannot be substituted by another Player of his caliber”.

6. By correspondence dated 10 January 2018, the Claimant put the Respondent in default of payment of the following amounts: (a) EUR 4,400,000 for the second instalment established in clause 2.1 of the transfer agreement, and (b) EUR 1,100,000 for the penalty fee stipulated in clause 4.2 par. i) of the transfer agreement. In addition, in said letter the Claimant requested an interest of 15% p.a. on the outstanding amount, i.e. EUR 5,500,000, pursuant to clause 4.2 par. ii) of the transfer agreement.

7. On 31 January 2018, the Claimant sent a second default notice to the Respondent requesting, once again, the payment of the above-mentioned amounts.

8. On 23 February 2018, the Claimant lodged a claim in front of FIFA against the Respondent requesting the payment of the following amounts:

 EUR 4,400,000 for the second instalment of the “guaranteed transfer fee” established in clause 2.1 of the transfer agreement;

 EUR 1,100,000 for the penalty contained in clause 4.2 par. i) of the transfer agreement;

 EUR 2,000,000 in accordance with clause 2.5 of the transfer agreement;

 An interest of 15% p.a. as from 5 January 2018 on the total amount, i.e. EUR 7,500,000, pursuant to clause 4.2 par. ii) of the transfer agreement.

9. Furthermore, the Claimant requested the imposition of sporting sanctions on the Respondent

10. In its claim, the Claimant explained that the Respondent failed to pay the second instalment of the “guaranteed transfer fee”, i.e. EUR 4,400,000. Therefore, the Claimant argued that it is entitled to receive the penalty fee of 25% established in clause 4.2 par. i) of the transfer agreement for an amount of EUR 1,100,000 (25% of 4,400,000 = 1,100,000).

11. In addition, the Claimant stated that the player was transferred to the Club of Country K, Club L on 28 January 2018. Consequently, and considering the content of clause 2.5 of the transfer agreement, the Claimant held that it is also entitled to receive an amount of EUR 2,000,000.

12. In its reply to the claim, the Respondent informed that it “comply the payment obligation before 2nd April”. In support of its allegations, the Respondent submitted an alleged proof of payment for the second installment of the transfer fee, i.e. EUR 4,400,000.

13. In its replica, the Claimant explained that the Respondent paid the second instalment of the transfer fee on 16 March 2018, i.e. “more than two months from the date that it was agreed the payment (5th January 2018)”.

14. In view of the above, the Claimant held that an amount of EUR 3,100,000 remains outstanding corresponding to the penalty contained in clause 4.2 par. i) of the transfer agreement, i.e. EUR 1,100,000, and to the amount provided in clause 2.5 of the transfer agreement, i.e. EUR 2,000,000.

15. Moreover, the Claimant reiterated that it is entitled to receive an interest of 15% p.a. on said amounts as from 5 January 2018 pursuant to clause 4.2 par. ii) of the transfer agreement.

16. Finally, the Claimant requested the Respondent “to be ordered to pay all the procedural and legal cost”.

17. The Respondent submitted its duplica reiterating its arguments and confirming its position with regards to the claim.

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 Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber were applicable to the matter at hand. In this respect, he referred to art. 21 of the Procedural Rules as well as to the fact that the present matter was submitted to FIFA on 23 February 2018. Therefore, the Single Judge concluded that the 2018 edition of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (hereinafter: the Procedural Rules) is applicable to the matter at hand.

2. Subsequently, the Single Judge analysed which regulations should be applicable as to the substance of the matter. In this respect, the Single Judge concluded that in accordance with art. 26 par. 1 and par. 2 of the Regulations on the Status and Transfer of Players (edition 2018), and considering that the present claim was lodged on 23 February 2018, the 2018 edition of said regulations (hereinafter: the Regulations) is applicable to the matter at hand as to the substance.

3. Furthermore, 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. 4 as well as art. 22 lit. f) of the Regulations, he was competent to deal with the present matter since it concerned a dispute between clubs affiliated to two different associations.

4. 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.

5. In doing so and to begin with, the Single Judge acknowledged that on 20 February 2017, the Respondent and the Claimant concluded an agreement in relation with the permanent transfer of the player from the latter to the Respondent, by means of which they agreed on the payment of “guaranteed transfer fee” of EUR 11,000,000 net, payable in one instalment of EUR 6,600,000 “no later than 5th March 2017” and another instalment of EUR 4,400,000 to be paid “on or before 5th January 2018”.

6. Furthermore, the Single Judge observed that, in accordance with clause 2.2. of the transfer agreement, the Claimant was entitled to receive the following “contingent transfer fees”: (i) EUR 1,000,000 net in the event the player scores twelve goals in official games, and (ii) EUR 1,000,000 net in the event that the player scores another twelve goals in official games.

7. In addition, the Single Judge noticed that clause 2.5 of the transfer agreement stipulates that “it is explicitly agreed that in case of the Player’s transfer to a third Club before 28th February 2019 the total net amount to be received from [the Claimant] under clause 2.2 shall become immediately due and payable irrespective if the conditions are met”.

8. In continuation, the Single Judge noted that clause 4.2 par (i) of the transfer agreement established that the Claimant is entitled to receive a penalty fee of 25% of the total outstanding amount “in case that [the Respondent] delays more than five (5) days the 2nd instalment of the Guaranteed transfer fee under clause 2.1”.

9. The Single Judge further observed that, on 23 February 2018, the Claimant lodged a claim against the Respondent before FIFA requesting the payment of EUR 7,500,000 plus 15% interest per annum.

10. In particular, the Single Judge noted that the Claimant explained that the Respondent failed to pay the second instalment of the “guaranteed transfer fee”, i.e. EUR 4,400,000. Therefore, the Claimant requested FIFA to order the Respondent to pay EUR 1,100,000 as penalty on the basis of clause 4.2 par. i) of the transfer agreement (25% of 4,400,000 = 1,100,000), on top of the second instalment of EUR 4,400,000.

11. In addition, the Single Judge observed that the Claimant stated that it is also entitled to receive EUR 2,000,000 pursuant to clause 2.5 of the transfer agreement, considering that the player was transferred to the Club of Country K Club L on 28 January 2018.

12. Conversely, the Single Judge took due note of the fact that the Respondent, on its part, rejected the Claimant’s claim and stated that it “comply the payment obligation before 2nd April”. In this respect, the Single Judge noticed that the Respondent submitted an alleged proof of payment for the second installment of the transfer fee, i.e. EUR 4,400,000.

13. Subsequently, the Single Judge observed that the Claimant acknowledged the payment made by the Respondent on 16 March 2018 and that consequently, the Claimant reduced the claimed amount to EUR 3,100,000 corresponding to the penalty established in clause 4.2 par. i) of the transfer agreement, i.e. EUR 1,100,000, and to the amount of USD 2,000,000, based on clause 2.5 of the transfer agreement.

14. In this context, and after having carefully examined the parties’ positions, the Single Judge noted that he first had to analyse whether the Claimant is entitled to receive or not the penalty amounting to EUR 1,100,000.

15. Having said that, the Single Judge observed that the Respondent paid the second instalment of the “guaranteed transfer fee” more than two months after the due date, i.e. 5 January 2018, and only after the notification by FIFA of the Claimant’s claim, i.e. on 13 March 2018.

16. Subsequently, the Single Judge focussed his attention on clause 4.2 par. i) of the transfer agreement. In this respect, the Single Judge observed that the penalty established in said clause would apply, inter alia, “in case that [the Respondent] delays more than five (5) days the 2nd instalment of the Guaranteed transfer fee under clause 2.1 which is agreed to be payable on 5th January 2018”.

17. Furthermore, the Single Judge concluded that penalty clauses may be freely entered into by the contractual parties and may be considered acceptable, in the event that the pertinent written clause meets certain criteria such as proportionality and reasonableness. In this respect, the Single Judge highlighted that in order to determine as to whether a penalty clause is to be considered acceptable, the specific circumstances of the relevant case brought before it shall also be taken into consideration.

18. In the specific case at hand, the Single Judge deemed that the penalty fee of 25% of the total due amount, which the parties contractually agreed, is both proportionate and reasonable in the case at hand. Furthermore, the Single Judge established that the second instalment was indeed paid by the Respondent more than 5 days after the due date.

19. On account of the above, the Single Judge decided that said contractual penalty fee is valid and applicable in the present matter.

20. Consequently, the Chamber decided that in accordance with the general legal principle of pacta sunt servanda, the Respondent is liable to pay to the Claimant the amount of EUR 1,100,000 as penalty in the light of the Respondent’s failure to pay the second instalment of the “guaranteed transfer fee” in a timely manner.

21. The Single Judge was keen to emphasise that according to the long standing and well-established jurisprudence of the Players´ Status Committee in similar cases, a compensation or penalty for late payment cannot be requested together with default interest as both requests are punitive in nature and aim at compensating the creditor for late payment. Therefore, the Single Judge rejected the Claimant´s request for 15% annual interest over the aforementioned amount.

22. In continuation, the Single Judge established that he had to examine whether the Claimant is entitled to receive or not the EUR 2,000,000 in accordance with clause 2.5 of the transfer agreement.

23. In this respect, the Single Judge decided that said clause must be interpreted as requiring the player to be transferred on a permanent basis to another club. In the specific case at hand, the Single Judge noted that, according to the information available in the Transfer Matching System (hereinafter: TMS), the player was transferred on loan to the Club of Country K, Club L, for a period of approximately 5 and a half months, returning to the Respondent after said period of time, where he still has a valid employment contract until 31 December 2019. 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 TMS.

24. Consequently, the Single Judge understood that clauses 2.2 (i) and (ii) could still materialize after the player’s return to the Respondent. Therefore, the Single Judge had to reject this part of the Claimant’s claim and decided that the Claimant is not entitled to receive EUR 2,000,000 pursuant to clause 2.5 of the transfer agreement.

25. In view of all the above-mentioned considerations, the Single Judge decided that the claim of the Claimant is partially accepted and that the Respondent has to pay to the Claimant the amount of EUR 1,100,000 relating to penalty established in clause 4.2 par. i) of the transfer agreement.

26. In continuation, 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.

27. 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.

28. 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.

29. As a conclusion, in view of the circumstances of the present matter, the Single Judge determined the costs of the current proceedings amounting to CHF 25,000. Consequently, the Single Judge of the Players’ Status Committee decided that the amount of CHF 5,000 has to be paid by the Claimant and the amount of CHF 20,000 by the Respondent in order to cover the costs of the present proceedings.

30. Lastly, the Single Judge rejected any claim for procedural costs in accordance with art. 18 par. 4 of the Procedural Rules and the respective longstanding jurisprudence in this regard.

31. The Single Judge concluded his deliberations in the present matter by establishing that any further claims lodged by the Claimant are rejected.

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 this decision, the amount of EUR 1,100,000.

3. If the aforementioned sum is not paid within the aforementioned deadline, interest at a rate of 5% p.a. will fall due as of expiry of the stipulated time limit and the present matter shall be submitted, upon request, to FIFA’s Disciplinary Committee for consideration and a formal decision.

4. Any further claim lodged by the Claimant is rejected.

5. The final costs of the proceedings in the amount of CHF 25,000 are to be paid, within 30 days as from the date of notification of this decision, as follows:

5.1 The amount of CHF 20,000 has to be paid by the Respondent 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 by the Claimant. Taking into account that the latter has already paid the amount of CHF 5,000 as advance of costs at the beginning of the present procedure, the Claimant is exempted to pay said amount to FIFA.

6. The Claimant is directed to inform the Respondent 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 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