F.I.F.A. – Players’ Status Committee / Commissione per lo Status dei Calciatori – club vs club disputes / controversie tra società – (2020-2021) – fifa.com – atto non ufficiale – Decision 11 August 2020

Decision of the

Single Judge of the Players' Status Committee

Passed on 11 August 2020,

regarding a contractual dispute concerning the player Reiner Castro

BY:

Roy Vermeer (the Netherlands), Single Judge of the PSC

CLAIMANT:

CARACAS FC, Venezuela

Represented by Mr Federico Ángel Marotta

RESPONDENT:

NANTONG ZHIYUN FC, China PR

Represented by Mr Joao Filipe Lobao

I. FACTS OF THE CASE

1. On 2 January 2019, the Chinese club, Nantong Zhiyun FC, (hereinafter: the Respondent) sent a proposal to the player, Mr Reiner Castro, whereby the former informed the latter about the following: “We would like officially to offer you the below terms, expecting you to play for our club starting in 2019 season of China League One. Contract duration: 3 years. Packages: annual salary: USD 300,000 net; all bonus will be subject to China FA's regulations”.

2. On 3 January 2019, the Respondent sent a “Request of Permanent Transfer” to the Venezuelan club, Caracas FC (hereinafter: the Claimant), indicating the following: “We would like to offer USD 500,000 in total to fully acquire the ownership of Mr. Castro for the transfer window started on Jan 1st, 2019. In terms of way of payment:

- USD 300,000 will be paid within three days after Mr. Castro signs the employment contract with us:

- USD 200,000 will be paid after Mr. Castro is put in line-up for 20 games in 2019 for us:

(…)

We have exclusively authorized Mr. Jue Wang (Daniel) of Danman Sports International to be fully representing us to handle all details regarding this matter.

Please be kindly noted that Mr. Castro's final employment contract signing will not legally binds this request and it is our discretion toward negotiation from which we can be withdrawing without any prior notice”.

3. On 4 January 2019, the Claimant replied as follows: “By means of this letter I confirm the arrival of a formal offer for the purchase of 100% of the economic rights of our player Reiner Castro for the value of USD 500,000 (Five hundred thousand American Dollars) , paid in the following way:

-USD 300,000 paid three (3) days after signing the contract and USD 200,000 paid once the player is aligned for 20 games in the 2019 season with his team.

To the following proposal, we respond:

-We accept the offer of USD 500,000 for 100% of the economic rights of Reiner Castro.

-We accept the payment of USD 300,000 three (3) days after the signing of the contract by Reiner Castro.

-We propose the payment of USD 200,000 sixty (60) days after signing the contract.

With nothing more to limit and thanking them for their interest in our player.”

4. On 6 January 2019, the Respondent replied to the Claimant as follows: “Regarding your counter-offer dated on Jan 4th about the approach of payment of transfer fee over your player Mr. Reiner Castro, we have taken a series factors into consideration and then we are accepting what you proposed:

- USD 300,000 will be paid within three days after Mr. Castro signs the employment contract with us:

- USD 200,000 will be paid before May 31th, 2019.(…)

Please be kindly noted that Mr. Castro's final employment contract signing will not legally binds this request and it is our discretion toward negotiation from which we can be withdrawing without any prior notice.”

5. On 12 January 2019, the Respondent addressed an “Invitation Letter” to the “Embassy of China”, indicating the following: “We are pleased to write this letter informing you that Mr. Pablo Enrique Martinez De San Vincent Merino (…) is being invited by us to China to accompany the football player, Mr. Reiner Alvey Castro Barrera, whom we are ready to sign as our formal employee.

Mr. Reiner Alvey Castro Barrera (…) is being invited by our club as well to come to China for the medical check in order to potentially sign the formal employment contract with us. We are scheduled to have Mr. Pablo Enrique Martinez De San Vincent Merino in Kunming where Mr. Reiner Alvey Castro Barrera will be arranged to run a medical check from Jan 15th - 20th

(…) we will be grateful if you kindly can process their visa application as soon as possible”.

6. On 12 January 2019, the Respondent addressed another “Invitation Letter”, this time for the player, Reiner Alvey Castro, indicating the following:

“[The player] is being invited by our club to come to China for the medical check in order to potentially sign the formal employment contract with us. We are a professional football club based in Nantong, Jiangsu, competing in League One organized by China Football Association in 2019, and that is the reason why we are inviting Mr. Reiner Alvey Castro Barrera who is considered a key player for us to compete in the league.”

7. On 12 January 2019, the player and the Respondent concluded an “Employment Pre-contract”, for the period of January 2019 to December 2021, indicating the following:

“This Employment Pre-contract is by and between Nantong Zhiyun Football Club Co., Ltd (as "Party A" below) and Mr. Reiner Castro, (as "Party B" below), and it specifies that the structure of employment terms negotiated by Party A and Party B has come into an initial agreement expressing a bi-laterally agreed willingness to be the employer and the employee, respectively.

However, this Employment Pre-contract also suggests that a series of employment procedures have not settled yet, leading to a unfinished transfer without any signed formal employment contract between Party A and Party B. Thus, this Employment Pre-contract is by no means representing an official signed employment contract, whose signing will be subject to the medical check arranged for Party Band further negotiations over a certain subjects between the Parties.

As well, this Employment Pre-contract only lists obligations and rights that belong to the structure of the employment negotiated and agreed over the weeks, and more detailed terms will be negotiated in a discussion for the formal employment contract in China.”

8. On an unspecified date, the Claimant and the Respondent concluded a “Player Transfer Agreement” indicating the following:

“ARTICLE 1 GENERAL PRINCIPLE OF AGREEMENT

It is agreed that the major objective of this agreement between the Parties should be conversion of ownership of the player. As the current owner of the player, Party B has agreed to sell the ownership to Party A by receiving the corresponding financial compensation as referred to "transfer fee".

The signing of this agreement only suggests the Parties have reached a unlimitedly identical idea of the player's transfer and this agreement will be legally executed under normal circumstances excluding force majeure and emergency that will be explained below in the corresponding article, that is to say, only if the player's employment contract and this agreement will be considered simultaneously legit shall make the transfer happen.

ARTICLE 2 TERMS OF PAYMENTS

Party A has agreed to pay an amount totaling US Dollar 500,000 to Party B to acquire the ownership of the player of US Dollar 500,000,

- US Dollar 300,000 will be paid to Party B within three days after the player signs the employment contract with Party A;

- the remaining US Dollar 200.000 will be paid to Party B before May 31st, 2019.

ARTICLE 3 TIME OF ACTION

As the respective league season of the parties begin and end at different point of time, this it is agreed by the parties that even though the season of party B s being operated at the moment, the player will be allowed by party B to come to China on Jan. 10th-15th, 2019, in order to run a medical check and contract signing arranged by Party A.

(…)

ARTICLE 5 FORCE MAJEURE AND EMERGENCY

The transfer will be made when and only when the player signs the employment contract with Party A, meaning the ownership of player by Party B is valid till then.”

9. On 30 January 2019, the Claimant and the Chilean club, CD Temuco, concluded an agreement for the transfer of the player to the latter, for the amount of USD 200,000.

10. In addition, said agreement stipulated the following:

“2.- OBJETO

Por medio del presente documento, CARACAS vende, cede y transfiere el cincuenta por ciento (50%) de los derechos económicos y el cien por ciento (100%) de los derechos federativos del jugador (…)”

Free translation into English:

"2.- PURPOSE

CARACAS hereby sells, assigns and transfers fifty percent (50%) of the economic rights and one hundred percent (100%) of the registration rights of the player (...)".

11. On 4 June 2019, the player lodged a claim before FIFA against the Respondent for breach of contract without just cause (Ref. 19-01223/akl).

12. On 17 January 2020, the DRC partially accepted the claim of the player, and established the following:

“2. The Respondent, Nantong Zhiyun FC, has to pay to the Claimant compensation for breach of contract in the amount of USD 835,000, plus 5% interest p.a. as from 4 June 2019 until the date of effective payment.”

13. In particular, the DRC established that the pre-contract of 12 January 2019 (cf. point 8 above) shall be understood as valid and legally binding employment contract.

14. On 20 May 2020, the Claimant sent a default notice to the Respondent, indicating the following:

“(..) FIFA rules require me to claim Nantong Zhiyun again for a period of ten days with the amount that will appear in our claim against Nantong Zhiyun before FIFA.

For this reason I claim (…) the sum of USD 50.000 for contractual breach of the transfer contract between both Clubs in January 2019. In the event that you don´t pay the sum demanded within 10 days we will be forced to initiate de claim before FIFA.”

15. The Claimant lodged a claim before FIFA and requested the payment of the amount of USD 50,000, “plus related interests”.

16. In particular, the Claimant detailed said amount as follows:

- The value of the transfer to the Respondent was established in the amount of USD 500,000;

- The claimant subsequently transferred the player to CD Temuco (cf. point 10 above) for the amount of USD 200,000;

- According to the Claimant, 50% of the economic rights agreed in the contract with the Respondent amount to USD 250,000 (i.e. 500,000/2);

- Therefore, the claimant argued that it lost the possibility to earn USD 50,000 (i.e. USD 250,000-USD 50,000).

17. In this respect, the Claimant insisted that the transfer agreement concluded with the Respondent was valid and binding as from 12 January 2019.

18. In its reply, the Respondent fully rejects the claim of the Claimant, alleging that the transfer agreement was not valid.

19. In particular, the Respondent claims that in spite of the fact that a decision was rendered by the DRC establishing that the pre-contract was to be considered a valid contract, this dispute was appealed in front of CAS and is not yet final and binding.

20. Furthermore, the Respondent claims that the validity of the transfer agreement was dependent on a successful medical exam, which was not even completed by the player, and on the signature of a final employment contract with the player, which was also not done, as the player left China in the middle of the medical check.

21. The Respondent further claims that the Claimant and the player were negotiating with the Chilean club and therefore the negotiations with the Chinese club were never concluded.

22. In view of the foregoing, the Respondent requests the rejection of the Claimant’s claim and that the Claimant should bear the costs of the present proceedings and the attorney fees.

II. CONSIDERATIONS OF THE SINGLE JUDGE OF THE PLAYERS’ STATUS COMMITTEE

A. Competence and applicable legal framework

23. First of all, the Single Judge of the Players’ Status Committee (hereinafter: 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 2 June 2020. Consequently, the June 2020 edition of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (hereinafter: Procedural Rules) is applicable to the matter at hand (cf. art. 21 of the Procedural Rules).

24. Subsequently, the Single Judge referred to art. 3 par. 2 and par. 3 of the Procedural Rules and confirmed that in accordance with art. 23 par. 1 and par. 4 in conjunction with art. 22 lit. f of the Regulations on the Status and Transfer of Players (edition June 2020) he is competent to deal with the present matter, which concerns a dispute between two clubs affiliated to different associations, i.e. a Venezuelan club and a Chinese club.

25. Furthermore, the Single Judge analysed which regulations should be applicable as to the substance of the matter. In this respect, he confirmed that in accordance with art. 26 par. 1 and par. 2 of the Regulations on the Status and Transfer of Players (June 2020), and considering that the present claim was lodged on 2 June 2020, the June 2020 edition of the Regulations on the Status and Transfer of Players (hereinafter: Regulations) is applicable to the matter at hand as to the substance.

B. Burden of proof

26. The Single Judge recalled the basic principle of burden of proof, as stipulated in art. 12 par. 3 of the Procedural Rules, according to which a party claiming a right on the basis of an alleged fact shall carry the respective burden of proof. Likewise, he stressed the wording of art. 12 par. 4 of the Procedural Rules, pursuant to which he may consider evidence not filed by the parties.

27. In this respect, the Single Judge also recalled that in accordance with art. 6 par. 3 of Annexe 3 of the Regulations, FIFA’s judicial bodies may use, within the scope of proceedings pertaining to the application of the Regulations, any documentation or evidence generated or contained in TMS.

C. Merits of the Dispute

I. Main legal discussion and considerations

28. The competence of the Single Judge and the applicable regulations having been established, the Single Judge entered into the substance of the matter. In this respect, the Single Judge started by acknowledging all the above-mentioned facts as well as the arguments and the documentation on file. 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.

29. Having said this, the Single Judge acknowledged that the Claimant and the Respondent signed an agreement regarding the transfer of the player, pursuant to which the Respondent undertook to pay to the Claimant the amount of USD 500,000 for the acquisition of 100% of the player’s economic rights, in two different instalments, upon the conclusion of an employment contract between the player and the Respondent (cf. clauses 2 and 5 of the contract of point I 8. supra).

30. Moreover, the Single Judge made reference to the FIFA proceedings under the reference no. 19-01223/akl, where the DRC decided that the pre-contract concluded between the Respondent and the player was a validly concluded employment contract and, consequently, in view of the player’s claim in the aforesaid proceedings, the DRC condemned the Respondent to pay to the player compensation for breach of contract upon the non-execution of the said contract.

31. In this regard, the Single Judge referred to the wording of clause 5 of the contract, which states that: “The transfer will be made when and only when the player signs the employment contract with [the Respondent], meaning the ownership of player by [the Respondent] is valid till then”. In this respect, the Single Judge determined that, having been established that the player and the Respondent concluded a valid contract, the condition precedent set in clause 5 of the contract was met and the transfer of the player from the Claimant to the Respondent is to be held has validly made and performed.

32. In this context, the Single Judge acknowledged the fact that the Claimant did transfer the player to the Chilean club, Deportes Temuco (hereinafter: Temuco), on 14 February 2019. In particular, the Single Judge noted that, according to both, the documentation provided by the Claimant and the information contained in the TMS, the Claimant transferred 50% of the player’s economic rights to Temuco, against payment of an amount of USD 200,000.

33. In this regard, the Single Judge took note of the calculations made by the Claimant in order to assess and quantify the damages suffered by the latter upon the Respondent’s non-execution of the transfer agreement concluded between the latter and the Claimant. After a careful analysis thereof, the Single Judge firstly stated that, whereas the monetary consideration under the transfer agreement signed between the Claimant and the Respondent amounted to USD 500,000 for the acquisition of 100% of the player’s economic rights; the monetary consideration agreed between the Claimant and Temuco for the acquisition of 50% of the player’s economic rights amounted to USD 200,000.

34. In this sense, the Single Judge acknowledged that, when compared, the proportional monetary difference between both transfer compensations amounts to USD 50,000, insofar it could be logically established that the transfer compensation agreed between the Claimant and the Respondent would have amounted to USD 250,000 if the said parties had agreed on transferring 50% of the player’s economic rights instead of 100% of the player’s economic rights (500,000/2 = 250,000).

35. In view of all of the above, the Single Judge further determined that, by transferring the player to Temuco against payment of a transfer compensation of USD 200,000, the Claimant de facto suffered a loss of income of USD 50,000, as argued by the latter.

36. At this point, the Single Judge concluded that, since the non-execution of the transfer agreement concluded between the Claimant and the Respondent is to be attributed to the latter, in coherence with the decision passed by the DRC in the case no. 19-01223/akl, the Respondent must be held liable to pay damages to the Claimant for the loss of income suffered by the Claimant upon the transfer of the player to Temuco. In this regard, the Single Judge concluded that –in the absence of a penalty clause in the transfer agreement signed by the parties–, the quantification of the damages made by the Claimant is reasonable, proportional and, hence, should be accepted.

37. As to the arguments brought forward by the Respondent, the Single Judge concluded that, contrary to the position maintained by the Respondent, the validity of the transfer agreement concluded between the latter and the Claimant was not subject to a successful medical exam of the player, but to the conclusion of a valid employment contract with the player, which did occur.

38. Moreover, the Single Judge determined that the appeal of a decision rendered by one of FIFA’s decision-making bodies does not entail a suspension of any other related proceeding dealt by FIFA’s deciding bodies.

39. Moreover, as to the argument of the Respondent concerning the transfer of the player to Temuco as the only transfer effectively concluded by the Claimant for the transfer of the player, the Single Judge referred –once again– to the condition precedent set in clause 5 of the contract, which was met, insofar the contract between the player and the Respondent was validly concluded, and determined that the transfer agreement was also validly concluded between the Claimant and the Respondent.

40. Taking into account the foregoing considerations, as well as the documentation presented by the Claimant in support of its petition, the Single Judge concluded that the Claimant had substantiated its claim with sufficient documentary evidence.

41. On account of the above, the Single Judge decided to fully accept the claim of the Claimant and therefore established that the Respondent shall be condemned to pay to the Claimant damages for loss of income in the amount of USD 50,000.

42. Moreover, the Single Judge referred to the interests claimed by the Claimant and determined that, in accordance with the well-established jurisprudence of the Players’ Status Committee, the Respondent shall be ordered to pay 5% interests p.a. as from the date on which the claim was lodged, i.e. 2 June 2020, until the date of effective payment.

43. Furthermore, taking into account the consideration under number II 25. above, the Single Judge referred to par. 1 and 2 of art. 24bis of the Regulations, which stipulate that, with its 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.

44. 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.

45. 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 Claimant 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 Respondent, 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 Respondent in accordance with art. 24bis par. 2 and 4 of the Regulations.

46. 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.

D. Costs

47. 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.

48. In this respect, the Single Judge reiterated that the Claimant’s claim is fully accepted. Therefore, the Single Judge decided that the Respondent shall bear the entirety of the costs of the current proceedings in front of FIFA.

49. The Single Judge further observed the temporary amendments outlined in art. 18 par. 2 lit. ii) of the Procedural Rules, which entered in force in 10 June 2020, according to which the maximum amount of procedural costs levied for any claim lodged prior to 10 June 2020, which was yet to be decided at the time of such temporary amendment, shall be equivalent to any advance of costs paid.

50. Accordingly, the Single Judge observed that the Claimant paid the amount of CHF 1,000 as advance of costs, and therefore decided that the maximum amount of costs of the proceedings corresponds to CHF 1,000.

51. Consequently, the Single Judge determined that the Respondent shall pay the amount of CHF 1,000 in order to cover the costs of the present proceedings.

52. Subsequently, the Single Judge reverted to art. 17 par. 5 in combination with art. 18 of the Procedural Rules, and observed that the advance of costs paid by a party shall be duly considered in the decision regarding costs. Therefore, the Single Judge decided that the Claimant is entitled to a reimbursement of CHF 1,000 given his considerations on the costs of the proceedings.

III. DECISION OF THE SINGLE JUDGE OF THE PLAYERS' STATUS COMMITTEE

1. The claim of the Claimant, Caracas FC, is accepted.

2. The Respondent, Nantong Zhiyun FC, has to pay to the Claimant, the following amount:

- USD 50,000 as outstanding remuneration plus 5% interest p.a. as from 2 June 2020 until the date of effective payment.

3. The Claimant is directed to immediately and directly inform the Respondent of the relevant bank account to which the Respondent must pay the due amount.

4. The Respondent shall provide evidence of payment of the due amount in accordance with this decision to psdfifa@fifa.org, duly translated, if applicable, into one of the official FIFA languages (English, French, German, Spanish).

5. In the event that the amount due, plus interest as established above is not paid by the Respondent within 45 days, as from the notification by the Claimant of the relevant bank details to the Respondent, the following consequences shall arise:

 1.

The Respondent shall be banned from registering any new players, either nationally or internationally, up until the due amount is paid and for the maximum duration of three entire and consecutive registration periods. The aforementioned ban mentioned will be lifted immediately and prior to its complete serving, once the due amount is paid.

(cf. art. 24bis of the Regulations on the Status and Transfer of Players).

2.

In the event that the payable amount as per in this decision is 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 the FIFA Disciplinary Committee.

6. The final costs of the proceedings in the amount of CHF 1,000 are to be paid by the Respondent to FIFA (cf. note relating to the payment of the procedural costs below).

For the Players' Status Committee:

Emilio García Silvero

Chief Legal & Compliance Officer

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) within 21 days of receipt of the notification of this decision.

NOTE RELATED TO THE PUBLICATION:

FIFA may publish this decision. For reasons of confidentiality, 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 Procedural Rules).

CONTACT INFORMATION:

Fédération Internationale de Football Association

FIFA-Strasse 20 P.O. Box 8044 Zurich Switzerland

www.fifa.com | legal.fifa.com | psdfifa@fifa.org | T: +41 (0)43 222 7777