F.I.F.A. – Players’ Status Committee / Commissione per lo Status dei Calciatori – club vs club disputes / controversie tra società – (2019-2020) – fifa.com – atto non ufficiale – Decision 27 February 2020

Decision of the Single Judge

of the Players’ Status Committee

passed on 27 February 2020,

by

Johan van Gaalen (South Africa)

Single Judge of the Players’ Status Committee,

on the matter between the club

Chongqing Lifan FC, China,

represented by Mr Yan Yuan

as Claimant

and the club

Club Atlético Independiente, Argentina

as Respondent

regarding a contractual dispute arisen between the parties

and relating to the player Emmanuel Gigliotti

I. Facts of the case

1. On 20 February 2017, the Chinese club, Chongqing Lifan FC (hereinafter: the Claimant), concluded a transfer agreement (hereinafter: the contract) with the Argentinian club, Atlético Independiente (hereinafter: the Respondent) in relation to the transfer of the player Emmanuel Gigliotti (hereinafter: the player) to the latter club by means of which the Respondent had to pay the Claimant a transfer fee of USD 1,300,000, payable as follows:

- USD 500,000 “within 10 (ten) business days after having received at the above mentioned domicile the original documents consisting of this Agreement together with its Apostille, essential requirements to transfer the money abroad”;

- USD 500,000, to be paid on 10 December 2017;

- USD 300,000 to be paid on 10 June 2018.

2. Furthermore, in accordance to art. 3.b. of the contract “should INDEPENDIENTE be in default of this form of a payment, it shall pay LIFAN, as penalty clause, 5 per cent (5%) of monthly interest until effective payment, in addition to the corresponding economic sanctions.”

3. In addition, in art. 3.e. the parties stipulated that “The Parties hereby recognize and acknowledge that, should INDEPENDIENTE fail to proceed with any of the payments under this Agreement […] penalty of 20% (twenty percent) shall apply as well as interest on default at the rate of 5% (five percent) per month, to be calculated pro rata. Moreover, LIFAN reserves the right to assert further claims, including but not limited to Claims for damages.”

4. Moreover, art. 4.a. of the agreement stipulated that “INDEPENDIENTE shall make no deduction from each and every sum payable to LIFAN hereunder with regard to the amount of solidarity which shall be due under Article 21 and Annex 5 of the FIFA Regulations”.

5. Finally, art. 7 of the contract stated that “LIFAN is entitled to share the transfer compensation (Transfer Fee) of the player’s following transfer, the percentage shall be 30 per cent (30%) of the total amount of Transfer Fee, after deduction of USD 1,300,000.00 […]. INDEPENDIENTE is obliged to inform LIFAN of the matter and accurate Transfer Fee of the above Transfer, and INDEPENDIENTE is obliged to pay such amount to LIFAN within 10 (ten) Business Day after receiving the Transfer Fee.

In addition, if the abovementioned transfer takes place prior to the payment in due time (e.g. 10th December, 2017 or 10th June, 2018) INDEPENDIENTE shall be obliged to pay LIFAN the unpaid amount within 10 (ten) Business Day after the Executive Date of the Transfer Agreement, which was entered by INDEPENDIENTE and the third Club”.

6. On 13 July 2018, the Claimant put the Respondent in default for the payment of USD 375,000 corresponding to the third instalment in the amount of USD 300,000, the “liquidated damages” in the amount of USD 60,000 and “late fee” in the amount of USD 15,000, referring to art. 3.b and 3.e of the contract.

7. On 8 May 2019, the Claimant sent a further letter to the Respondent and requested to “pay off the debt incurred as a result of late payment (June 10, 2018, payment date of USD 300,000.00 installment) according to article 3 subsection b, and 5% of monthly interest until effective payment plus a penalty of 20% according to subsection e.”.

8. In the same letter, the Claimant requested the payment of the sign on fee for the transfer of the player to Toluca de México.

9. On 17 June 2019, Claimant lodged a claim in front of FIFA against the Respondent and requested from the Respondent the payment USD 1,329,500 corresponding to the following:

- USD 139,500, corresponding to the “overdue interest calculated at the rate of 5% per month over the third installment from the default date 10th June, 2018 to its effective payment date 19th March, 2019;

- USD 60,000 corresponding to the penalty fee of 20% of the third installment;

- USD 810,000 corresponding to “the sell-on fee calculated over 30% of USD 4,000,000.00 of Emmanuel Gigliotti’s following transfer to Toluca de México club after deduction of USD 1,300,000.00”;

- USD 160,000, corresponding the “overdue interest calculated at the rate of 5% per month”;

- USD 160,000 corresponding to the “penalty agreed in the Transfer Agreement and calculated on 20%”.

10. Furthermore, the Claimant requested that “all the expenses inherent to the current proceeding and to reimburse the Claimant of eventual amounts paid as arbitration costs and with other expenses incurred in connection with the current proceeding.”

11. Finally, the Claimant requested the imposition of sporting sanctions against the Respondent.

12. In its claim, the Claimant deemed that the Respondent paid the 3rd instalment on 19 March 2019 and therefore the Claimant is entitled to the penalty clause and interest as stipulated in art. 3.b and 3.e.

13. In this regards the Claimant argued that the Respondent “has not pay even one penny to LIFAN about the interest and penalty of overdue payment of the third instalment”.

14. Furthermore, the Claimant claimed that that it “has found that the player, Emmanuel Gigliotti, has transfer to the club Toluca de México from INDEPENDIENTE in January, 2019 on internet […] and the following transfer fee is about USD 4,000,000.00 […] As well as the penalty of 20% […] plus 5% […] for the non-payment of this transfer fee”.

15. In addition, the Claimant argued that despite being put in default, the Respondent “continued without paying any of the amounts in debt, and nor even replied to the payment request, -situation that persists at the present date”.

16. Consequently, the Claimant highlighted that “INDEPENDIENTE had failed to honor the Transfer Agreement, and despite having knowledge of its obligations and of the consequences of its breach, decided without any justification and for no legitimate reason, to breach the agreement and by not paying to LIFA N the overdue interest and penalty as delayed payment of the third installment, plus the sell-on fee of Emmanuel Gigliotti agreed in clause 3.b) and e). clause 7 of the contract.”

17. In spite of having been invited to do so, the club did not reply to the claim.

18. According to the information available on the FIFA Transfer Matching System (hereinafter: TMS), the player transferred from CA Independiente to Toluca de Mexico on 25 January 2019 for a transfer fee in the amount of USD 1,500,000, payable on 23 January 2019.

19. During the proceeding, the Claimant was informed of these terms, however, did not amend its 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 also referred to as: the Single Judge) analysed whether he was competent to deal with the matter at hand. In this respect, he took note that the present matter was submitted to FIFA on 17 June 2019. Taking into account the wording of art. 21 of the 2019 edition of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (hereinafter: the Procedural Rules), the aforementioned edition of the 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 January 2020 edition of the Regulations on the Status and Transfer of Players and, on the other hand, to the fact that the claim was lodged in front of FIFA on 17 June 2019. In view of the foregoing, the Single Judge concluded that the June 2019 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. 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 two 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. The Single Judge emphasised, however, 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. In particular, the Single Judge emphasised 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 documents or evidence generated or contained in the TMS.

5. First of all, the Single Judge acknowledged that on 20 February 2017, the parties concluded a transfer agreement relating to the transfer of the player from the Claimant to the Respondent with the terms as indicated in points I.1 – 5 above.

6. The Single Judge further took note that the Claimant lodged a claim against the Respondent, requesting the payment of the total amount of USD 1,329,500.

7. Moreover, the Single Judge observed that according to the Claimant, the Respondent did not provide any answer to the Claimant’s default notices.

8. Subsequently, the Single Judge noted that the Respondent failed to present its response to the claim of the Claimant, in spite of having been invited to do so. By not presenting its position to the claim, the Single Judge was of the opinion that the Respondent renounced its right of defence and thus, in principle, accepted the allegations of the Claimant.

9. Furthermore, as a consequence of the aforementioned consideration, the Single Judge concurred that in accordance with art. 9 par. 3 of the Procedural Rules, the Single Judge shall take a decision upon the basis of the documentation already on file; in other words, upon the statements and documents presented by the Claimant.

10. Having analysed the statement of the Claimant and the documents on file, the Single Judge concluded that the Respondent failed to make the payment of the last instalment of the transfer fee in the amount of USD 300,000 on time. In this respect, the Single Judge pointed out, that instead of making the payment on 10 June 2018, the Respondent only paid the amounts on 19 March 2019.

11. Having established that the last instalment was paid too late, the Single Judge focussed his attention on the penalty clause as stipulated in art. 3.e. of the contract and recalled 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 regard, 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 him shall be taken into consideration.

12. In the specific case at hand, the Single Judge deemed that a penalty fee of 20% of the outstanding amount, which the parties contractually agreed upon in the context of the agreement, is both proportionate and reasonable.

13. On the account of the above, the Single Judge decided that the penalty fee of USD 60,000 is valid and applicable in the present matter.

14. The Single Judge then turned his attention on art. 3.b of the contract which stipulated that an interest of 5% per month shall apply if the Respondent shall be in default with its payment. In this regard, the Single Judge calculated that such a monthly interest accounts to a yearly interest of 60% which in accordance with the jurisprudence of the Players’ Status Committee as well as with Swiss law is considered excessive and disproportionate.

15. Thus, bearing in mind the foregoing and taking into consideration the well-established jurisprudence as well as Swiss law, the Single Judge decided to reduce such interest to the amount of 18% p.a. over the amount of USD 300,000 as from the due date until the date when it was actually paid.

16. The Single Judge then focussed his attention on art. 7 of the contract which stipulated that the Claimant “is entitled to share the transfer compensation (Transfer Fee) of the player’s following transfer, the percentage shall be 30 per cent (30%) of the total amount of Transfer Fee, after deduction of USD 1,300,000.00 […]. INDEPENDIENTE is obliged to inform LIFAN of the matter and accurate Transfer Fee of the above Transfer, and INDEPENDIENTE is obliged to pay such amount to LIFAN within 10 (ten) Business Day after receiving the Transfer Fee”

17. In addition, the Single judge observed that according to the information available on TMS, the player was transferred on 25 January 2019, from the Respondent to the Mexican club Toluca de Mexico for a transfer fee in the amount of USD 1,500,000 payable on 23 January 2019. With this in mind, the Single Judge concluded that the sell-on clause in art. 7 of the contract was triggered and deemed that an amount of USD 60,000 had to be paid by the Respondent to the Claimant latest by 2 February 2019.

18. Having established, that the Respondent failed to pay the sell-on fee to the Claimant, the Single Judge once again referred to art. 3.e. of the contract and noted the penalty of 20% as well as an interest would apply also on this payment. Referring to his previous conclusions in points II. 12., 14. and 15., the Single Judge concluded that the Claimant shall be entitled to a penalty in the amount of USD 12,000 and an interest rate of 18% p.a. on the amount of USD 60,000 as from 3 February 2019 until the date of effective payment.

19. Subsequently, the Single Judge decided to reject the Claimant’s claim pertaining to legal costs in accordance with art. 18 par. 4 of the Procedural Rules and the Committee’s longstanding jurisprudence in this regard.

20. Taking into account all the above considerations, the Single Judge decided to partially accept the Claimant’s claim.

21. 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 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).

22. In respect of the above, and taking into account that the claim of the Claimant had been partially accepted, the Single Judge concluded that both the Claimant and the Respondent had to bear a part of the costs of the current proceedings before FIFA.

23. 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 USD 1,329,500, the Single Judge concluded that the maximum amount of costs of the proceedings corresponds to CHF 25,000.

24. In conclusion, the Single Judge determined the costs of the current proceedings to the amount of CHF 25,000. Moreover, in line with his aforementioned considerations and taking into account the degree of success, 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 to cover the costs of the present proceedings.

25. Taking into account the consideration under number II.2 above, the Single Judge referred to par. 1 and 2 of art. 24bis of the Regulations, which stipulate that, with his decision, the pertinent FIFA deciding body shall also rule on the consequences deriving from the failure of the concerned party to pay the relevant amounts of outstanding remuneration and/or compensation in due time.

26. In this regard, the Single Judge pointed out that, against clubs, the consequence of the failure to pay the relevant amounts in due time shall consist of a ban from registering any new players, either nationally or internationally, up until the due amounts are paid and for the maximum duration of three entire and consecutive registration periods.

27. Therefore, bearing in mind the above, the Single Judge decided that, in the event that the Respondent does not pay the amounts due to the player within 45 days as from the moment in which the Claimant, following the notification of the present decision, communicates the relevant bank details to the club, a ban from registering any new players, either nationally or internationally, for the maximum duration of three entire and consecutive registration periods shall become effective on the club in accordance with art. 24bis par. 2 and 4 of the Regulations.

28. Finally, the Single Judge recalled that the above-mentioned ban will be lifted immediately and prior to its complete serving upon payment of the due amounts, in accordance with art. 24bis par. 3 of the Regulations.

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

1. The claim of the Claimant, Chongqing Lifan FC, is partially accepted.

2. The Respondent, Club Atlético Independiente, has to pay to the Claimant the amount of USD 132,000.

3. The Respondent has to pay to the Claimant interest of 18% p.a. as follows:

a. 18% interest p.a. on the amount of USD 300,000, as from 11 June 2018 until 19 March 2019;

b. 18% interest p.a. on the amount of USD 60,000 as from 3 February 2019 until the date of effective payment.

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

5. The Claimant is directed to inform the Respondent, immediately and directly, preferably to the e-mail address as indicated on the cover letter of the present decision, of the relevant bank account to which the Respondent must pay the amounts mentioned under points 2. and 3. above.

6. The Respondent shall provide evidence of payment of the due amounts in accordance with points 2. and 3. above to FIFA to the e-mail address psdfifa@fifa.org, duly translated, if need be, into one of the official FIFA languages (English, French, German, Spanish).

7. In the event that the amounts due, plus interest in accordance with points 2. and 3. above, are not paid by the Respondent within 45 days as from the notification by the Claimant of the relevant bank details to the Respondent, the Respondent shall be banned from registering any new players, either nationally or internationally, up until the due amounts are paid and for the maximum duration of three entire and consecutive registration periods (cf. art. 24bis of the Regulations on the Status and Transfer of Players).

8. The ban mentioned in point 7. above will be lifted immediately and prior to its complete serving, once the due amount is paid.

9. In the event that the aforementioned sums, plus interest, are still not paid by the end of the ban of three entire and consecutive registration periods, the present matter shall be submitted, upon request, to FIFA’s Disciplinary Committee for consideration and a formal decision.

10. The final costs of the proceedings in the amount of CHF 25,000 are to be paid by both parties as follows:

10.1 The amount of CHF 5,000 has to be paid by the Claimant. Considering that the latter already paid an advance of costs in the amount of CHF 5,000 at the start of the present proceedings, the Claimant is exempted from paying the aforementioned procedural costs.

10.2 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. 19-01269/akl-gra:

UBS Zurich

Account number 366.677.01U (FIFA Players’ Status)

Clearing number 230

IBAN: CH27 0023 0230 3666 7701U

SWIFT: UBSWCHZH80A

*****

Note related to the publication:

The FIFA administration may publish decisions issued by the Players’ Status Committee or the DRC. Where such decisions contain confidential information, FIFA may decide, at the request of a party within five days of the notification of the motivated decision, to publish an anonymised or a redacted version (cf. article 20 of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber).

Note related to the appeal procedure:

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. 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

Emilio García Silvero

Chief Legal & Compliance Officer