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 arisen between the parties

and relating to the player, Player E

I. Facts of the case

1. On 17 January 2013, the club of Country B, Club A (hereinafter: Club A or Claimant) concluded a transfer agreement (hereinafter: the transfer agreement) with the club of Country D, Club C (hereinafter: Club C or Respondent) in relation to the transfer of the player, Player E (hereinafter: the player) to the latter club, by means of which Club C undertook to pay to Club A a transfer compensation of EUR 850,000, payable in 9 instalments in the period between 1 May 2013 and 1 November 2014.

2. In addition, in article 2.3.3 of the transfer agreement, the parties agreed upon the following clause: ‘In case of a subsequent transfer of the player from the Club [Club C] to a third club, to pay to Club A 50% (fifty percent) of the amount of the transfer compensation received by the club under such subsequent transfer of the player, within 5 banking days from the moment of receipt of the appropriate transfer compensation. […] Considering this additional obligation, the Club [Club C] shall be obliged to act in good faith with regard to the mentioned additional rights of Club A, to inform Club A about receipt of any offers/proposals concerning possible transfer of the player (by means of forwarding of a copy of such offers to Club A), and to conclude appropriate contract only in the event of explicit written consent of Club A to the conditions of such provided offer for a subsequent transfer of the player. The Club [Club C] shall also be obliged to provide Club A with a copy of such concluded contract in this regard’.

3. Furthermore, article 3.2 of the transfer agreement holds the following clause: ¨’In case of a delay of execution by the club of any payments under the present contract, the club shall be obliged to pay a penalty of 1% of the amount due per each day of the delay of such payment. Club A and the club have explicitly agreed and reconfirm that such penalty fee is fair and proportionate and waive any right to challenge it. Besides, in case of a delay with any payment under the cl. 2.3.2 by the club for more than 10 banking days, the whole remaining amounts under this clause will become immediately due by the club’.

4. On 26 March 2017, Club A lodged a claim with FIFA against Club C on the basis of the transfer agreement and requested from the latter club the payment of the following:

 1,250,000 in the currency of Country D as ‘additional transfer compensation agreed for the permanent transfer of the player […]’ (cf. point 2. above);

 ‘the agreed contractual penalty clause’ (cf. point 3. above), as follows:

- 1% of the amount of 500,000 in the currency of Country D as from 30 June 2015 until the day of effective payment;

- 1% of the amount of 100,000 in the currency of Country D as from 30 July 2015 until the day of effective payment;

- 1% of the amount of 100,000 in the currency of Country D as from 30 August 2015 until the day of effective payment;

- 1% of the amount of 100,000 in the currency of Country D as from 30 September 2015 until the day of effective payment;

- 1% of the amount of 100,000 in the currency of Country D as from 30 October 2015 until the day of effective payment;

- 1% of the amount of 100,000 in the currency of Country D as from 30 November 2015 until the day of effective payment;

- 1% of the amount of 100,000 in the currency of Country D as from 30 December 2015 until the day of effective payment;

- 1% of the amount of 100,000 in the currency of Country D as from 30 January 2016 until the day of effective payment;

- 1% of the amount of 100,000 in the currency of Country D as from “30” February 2016 until the day of effective payment;

- 1% of the amount of 100,000 in the currency of Country D as from 30 March 2016 until the day of effective payment;

- 1% of the amount of 100,000 in the currency of Country D as from 30 April 2016 until the day of effective payment;

- 1% of the amount of 100,000 in the currency of Country D as from 30 May 2016 until the day of effective payment;

- 1% of the amount of 100,000 in the currency of Country D as from 30 June 2016 until the day of effective payment;

- 1% of the amount of 100,000 in the currency of Country D as from 30 July 2016 until the day of effective payment;

- 1% of the amount of 100,000 in the currency of Country D as from 30 August 2016 until the day of effective payment;

- 1% of the amount of 100,000 in the currency of Country D as from 30 September 2016 until the day of effective payment.

Equally, Club A requested FIFA to impose disciplinary sanctions on Club C, as well as to order that Club C has to pay CHF 5,000 as advance of costs to Club A.

5. In its claim, Club A explains that on 15 June 2015, it was informed by Club C that it had received an offer of 2,500,000 in the currency of Country D from the club of Country D, Club F, for the transfer of the player. Moreover, Club A explains that on 23 June 2015, Club C accepted the offer of Club F.

6. In addition, Club A states that on 9 July 2015, it received from Club C a signed version of the transfer agreement concluded between Club C and Club F, based on which the player was transferred on 24 June 2015 for the amount of 2,500,000 in the currency of Country D from Club C to Club F, payable as follows:

 1,000,000 in the currency of Country D due ‘within 48 hours’ after the player passing a medical examination ‘or after signing the documents necessary for the transfer, whichever occurs last’;

 1,500,000 in the currency of Country D, payable in 15 instalments of 100,000 in the currency of Country D each, due as from 25 July 2015 ‘and the rest on the same day of the subsequent months’.

7. In view of the foregoing, Club A argues that, as per clause 2.3.3. of the transfer agreement, it is entitled to 1,250,000 in the currency of Country D, which amount however was never paid by Club C, despite several e-mails of Club A. In this respect, Club A submitted copies of several reminders it sent via e-mail in Club C, in which it requested the payment of the outstanding amounts.

8. Finally, Club A explains that on 7 August 2015, it put Club C in default for the payment of the outstanding amount of 1,250,000 in the currency of Country D, providing it with a 10 days’ deadline to make the payment. Further, Club A notified that it would lodge a complaint before FIFA, if Club C would not pay the outstanding amount in the aforementioned deadline.

9. In its reply to Club A’s claim, Club C pointed out that the transfer agreement concluded between Club C and Club F, submitted by Club A in its claim, cannot be taken into account as it is not available in one of the official FIFA languages.

10. Further, Club C explained that it always acted in good faith, by providing Club A the relevant documentation of the transfer of the player from its club to Club F, but that it is having financial problems, which lead to the nonfulfillment of its duties towards Club A, as per the transfer agreement.

11. In relation to the penalty clause agreed upon between the parties, Club C argues that said clause is not applicable to the matter at hand, as the clause only refers to ‘the delays regarding the value payed in the transfer of the player from Club A to Club C, not in other cases’. Furthermore, Club C refers to a case previously pending before the PSC between its club and Club A, concerning the transfer of the player from Club A to Club C (case ref. XXX). In said case, on 10 March 2015, it was decided by the Single Judge of the Players’ Status Committee that the penalty clause as agreed upon between the parties in clause 3.2, had to be reduced to the standard interest.

12. In its replica, Club A submitted an English translation of the transfer agreement, and pointed out that Club C did not dispute that an amount of 2,500,000 in the currency of Country D was indeed paid by Club F to Club C for the transfer of the player.

13. Furthermore, Club A argues that ‘alleged financial troubles of the Respondent in no way could justify non-execution of the financial obligations under the transfer contract’, as well as that it has its own financial difficulties, caused by ‘military aggression and its economic consequences’. In addition, Club A holds that the penalty clause should be applied to the current case and asks for the acceptance of its claim.

14. In its duplica, Club C states that Club A did not contest as to the substance its argumentation about the non-applicability of the penalty clause, which argumentation therefore must be considered ‘uncontroversial’. Finally, Club C reiterates all its previous arguments.

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 Procedural Rules are applicable to the matter at hand. In view of the fact that the present matter was submitted to FIFA on 26 March 2017, the Single Judge of the Players’ Status Committee concluded that the 2017 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 present matter (cf. art. 21 of the Procedural Rules).

2. Furthermore, 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 referred, on the one hand, to art. 26 par. 1 and 2 of the 2016 and 2018 editions of the Regulations on the Status and Transfer of Players and, on the other hand, to the fact that the claim was lodged with FIFA on 26 March 2017. In view of the foregoing, the Single Judge concluded that the 2016 edition of the FIFA Regulations for the Status and Transfer of Players (hereinafter: the Regulations) is applicable to the case at hand as to the substance.

3. Subsequently, 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 Regulations 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 present matter, the Single Judge started by acknowledging the facts of the dispute, the arguments of the parties as well as the documentation contained in the file.

5. In doing so, the Single Judge noted that, on 17 January 2013, Club A and Club C had concluded a transfer agreement (hereinafter: the agreement) which provided for Club A to receive from Club C EUR 850,000 as transfer fee for the transfer of the player from Club A to Club C.

6. Furthermore, the Single Judge also referred to article 2.3.3 of the transfer agreement, according to which in case of a subsequent transfer of the player from Club C to a third club, Club A would be entitled to 50% of the relevant transfer compensation, as well as to article 3.2 of the transfer agreement, according to which in case of late payment of the relevant amount by Club C, a penalty of 1% of the amount due per each day of the delay would fall due.

7. In continuation, the Single Judge took note that, in its claim to FIFA, Club A argued that it is inter alia entitled to receive from Club C the payment of the amount of 1,250,000 in the currency of Country D, corresponding to 50% of the value of the transfer compensation of 2,500,000 in the currency of Country D, which was paid in the scope of the subsequent transfer of the player from Club C to Club F in June 2015.

8. Furthermore, the Single Judge noted that Club A had also requested to be awarded the penalty of 1% of the amount due per each day of the delay, as Club C allegedly failed to make the payment of the amount of 1,250,000 in the currency of Country D to Club A on time.

9. Equally, the Single Judge observed that, for its part, Club C did not deny that it had not made the payment of the amount of 1,250,000 in the currency of Country D on time, however explained that it was in financial problems. Furthermore, Club C pointed out that the penalty clause is excessive and should be reduced to 5% interest p.a.

10. With the aforementioned considerations in mind, the Single Judge was eager to emphasize that the parties to the dispute had concluded a transfer agreement, which clearly stipulated that, in case of a transfer of the player from Club C to a third club, Club C was obliged to pay 50% of of the relevant transfer compensation to Club A. Furthermore, it remained uncontested between the parties that the player, on 24 June 2015, was transferred from Club C to Club F for a transfer compensation amounting to 2,500,000 in the currency of Country D, in 16 installments, due in the period between June 2015 and September 2016.

11. Hence, considering all of the aforementioned as well as taking into account the legal principle of pacta sunt servanda, which in essence means that agreements must be respected by the parties in good faith and bearing in mind that it is undisputed that the amount of 1,250,000 in the currency of Country D due as per the transfer agreement has not yet been paid by Club C to Club A, the Single Judge resolved that Club C, in order to fulfil its obligations established in the document in question has to pay to Club A the outstanding amount of 1,250,000 in the currency of Country D.

12. In addition and as to Club A’s request related to the payment of a penalty fee of 1% of the relevant instalments for each day of delay of said instalments, the Single Judge noted that said penalty fee is nothing more than an interest rate, as it is an open-ended penalty, applicable until the date of effective payment. In view of the foregoing circumstances, the Single Judge deemed that said penalty clause is in fact a hidden interest rate, which in reality would correspond to an interest rate of 365% p.a.

13. In this context, the Single Judge observed that said interest rate is to be considered excessive and disproportionate as per Swiss law, and is moreover explicitly challenged by Club C.

14. Taking into account the foregoing circumstances, as well as FIFA’s well-established jurisprudence in this respect, the Single Judge determined that Club A’s request for interest had to be reduced to 18% p.a. on the respective instalments, until the date of effective payment, in accordance with Swiss law.

15. In conclusion, the Single Judge decided that the claim of the Claimant is partially accepted and the Respondent has to pay to the Claimant the amount of 1,250,000 in the currency of Country D, plus 18% interest p.a. on said amount as from the respective due dates.

16. 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 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 (cf. art. 18 par. 1 of the Procedural Rules).

17. In this respect, the Single Judge reiterated that the claim of the Claimant is partially accepted and that the Respondent is the party at fault. Therefore, the Single Judge decided that the Respondent and the Claimant should split the costs of the current proceedings in front of FIFA.

18. 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 above CHF 200,001, the Single Judge concluded that the maximum amount of costs of the proceedings corresponds to CHF 25,000.

19. In conclusion, and considering that the case at hand was adjudicated by the Single Judge and not by the Players’ Status Committee in corpore and that a similar dispute between the parties had already been brought before FIFA by Club A due to Club C’s failure to comply with its contractual obligations, the Single Judge determined the costs of the current proceedings to the amount of CHF 20,000, CHF 5,000 to be borne by the Claimant and 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, within 30 days as from the date of notification of the present decision, the total amount of 1,250,000 in the currency of Country D, plus 18% interest p.a. as follows:

a) 18% p.a. over the amount of 500,000 in the currency of Country D from 30 June 2015 until the date of effective payment;

b) 18% p.a. over the amount of 50,000 in the currency of Country D from 30 July 2015 until the date of effective payment;

c) 18% p.a. over the amount of 50,000 in the currency of Country D from 30 August 2015 until the date of effective payment;

d) 18% p.a. over the amount of 50,000 in the currency of Country D from 30 September 2015 until the date of effective payment;

e) 18% p.a. over the amount of 50,000 in the currency of Country D from 30 October 2015 until the date of effective payment;

f) 18% p.a. over the amount of 50,000 in the currency of Country D from 30 November 2015 until the date of effective payment;

g) 18% p.a. over the amount of 50,000 in the currency of Country D from 30 December 2015 until the date of effective payment;

h) 18% p.a. over the amount of 50,000 in the currency of Country D from 30 January 2016 until the date of effective payment;

i) 18% p.a. over the amount of 50,000 in the currency of Country D from 1 March 2016 until the date of effective payment;

j) 18% p.a. over the amount of 50,000 in the currency of Country D from 30 March 2016 until the date of effective payment;

k) 18% p.a. over the amount of 50,000 in the currency of Country D from 30 April 2016 until the date of effective payment;

l) 18% p.a. over the amount of 50,000 in the currency of Country D from 30 May 2016 until the date of effective payment;

m) 18% p.a. over the amount of 50,000 in the currency of Country D from 30 June 2016 until the date of effective payment;

n) 18% p.a. over the amount of 50,000 in the currency of Country D from 30 July 2016 until the date of effective payment;

o) 18% p.a. over the amount of 50,000 in the currency of Country D from 30 August 2016 until the date of effective payment;

p) 18% p.a. over the amount of 50,000 in the currency of Country D from 30 September 2016 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 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 by the Claimant. As the Claimant already paid the amount of CHF 5,000 to FIFA as advance of costs, no further amount of costs is due by the Claimant.

5.2. The amount of CHF 15,000 by the Respondent, 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

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