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 26 January 2021

Decision of the

Single Judge of the Players' Status Committee

passed on 26 January 2021

regarding a contractual dispute concerning the player Alexsa Terzic

BY:

Johan van Gaalen (South Africa), Single Judge of the PSC

CLAIMANT:

ACF Fiorentina, Italy

Represented by Mr Francisco Larios and Mr Marco Vigna

RESPONDENT:

FK Crvena Zvezda, Serbia

Represented by Mr Sven Demeulemeester

I.

I. FACTS OF THE CASEFACTS OF THE CASE

1. On 27 May 2019, the Italian club, ACF Fiorentina (hereinafter: the Claimant) and the Serbian club, FK Crvena Zvezda (hereinafter: the Respondent) executed a transfer agreement (hereinafter: transfer agreement) for the transfer of the player Alexsa Terzic (hereinafter: the player).

2. Pursuant to the transfer agreement, the Claimant undertook to pay to the Respondent EUR 1,350,000 in three instalments, as follows:

- EUR 250,000 by 5 July 2019;

- EUR 600,000 by 5 March 2020;

- EUR 500,000 by 5 September 2020.

3. Following the execution of the transfer agreement, the Respondent assigned its receivables under the transfer agreement to a German bank, IBB (hereinafter: Bank) which was accepted by the Claimant on 5 July 2019. Accordingly, the first instalment of EUR 250,000 under the transfer agreement was paid by the Claimant to the Bank.

4. Notwithstanding the above, on 10 March 2020, the Claimant mistakenly paid EUR 596,767.95 to the Respondent and not to the Bank.

5. The parties tried engaged in negotiations as to the reimbursement of the amounts or payment by the Respondent to the bank, to no avail; during this time, the Respondent acknowledged receipt of the sum of EUR 596,767.95.

6. On 8 May 2020, the Claimant paid EUR 596,767.95 to the Bank.

7. On 14 May 2020 the Claimant and the Respondent executed a settlement agreement (hereinafter: settlement agreement), according to which the Respondent undertook to the following:

- Payment of EUR 596,767.95 to the Claimant by 30 September 2020 plus 6% interest p.a. as from 10 March 2020 until the date of effective payment;

- A penalty fee of 20% in case of default.

8. On 8 October 2020, the Claimant put the Respondent in default of payment of EUR 596,767.95 plus EUR 119,359.59 as penalty fee, plus interest, to no avail.

9. On 12 November 2020, the Claimant filed the claim at hand, sustaining the Respondent failed to honour the settlement agreement and requesting the following relief:

“(i) rule that FK Crvena Zvezda is delinquent on and owes ACF Fiorentina EUR 596,797.95 (Five Hundred Ninety-Six Thousand Seven Hundred Ninety-Seven Euros and Ninety-Five Cents) corresponding to the second instalment of the Transfer Agreement mistakenly paid from ACF Fiorentina to FK Crvena Zvezda for the transfer of the Player;

(ii) order FK Crvena Zvezda to pay ACF Fiorentina:

- EUR 596,797.95 (Five Hundred Ninety-Six Thousand Seven Hundred Ninety-Seven Euros and Ninety-Five Cents) plus 6% interest p.a. on the Outstanding Sum from the date of the payment made by ACF Fiorentina (i.e. 10 March 2020) until the date of effective payment; and

- EUR 119,359.59 (One Hundred and Nineteen Thousand Three Hundred and Fifty-Nine Euros and Fifty-Nine Cents) corresponding to the delinquency fee pursuant to Article 3 of the Settlement Agreement.

(iii) impose sanctions on FK Crvena Zvezda pursuant to Article 12bis of the FIFA Regulations on the Status and Transfer of Players.

(iv) order FK Crvena Zvezda to pay the costs of these proceedings (if any)”.

10. In its reply to the claim, the Respondent acknowledged to owe the principle amount to the Claimant, but objected to the application of article 12bis of the FIFA Regulations on the Status and Transfer of Players (RSTP) on the grounds that the outstanding payment had not been due for more than 30 days.

11. The Respondent also argued that it could not pay the amount due on light of the COVID-19 Pandemic, which had a severe impact on the Respondent’s finances due inter alia to defaulted payments by third parties and late re-start of competitions (and payment of participation fees) such as the UEFA Europa League. The Respondent is of the position that these circumstances prevented it from having liquidity to pay the amount due back.

12. Lastly, the Respondent argued that the penalty fee of 20% is disproportionate and should be voided, or alternatively reduced to 5% “given that in previous cases the FIFA DRC has consistently held that any interest and penalty exceeding 18% of the principal amount is to be considered excessive. Moreover, when analysing the different elements put forward by the Swiss Federal Tribunal in order to perform the mandatory balance of interests test, one must conclude that in the case at hand even a penalty of 18% is excessive and abusive”. The Respondent submitted that on the balance between the creditor’s interest, the seriousness of the breach, the debtor’s fault and the financial situation of the parties, the penalty cannot be upheld.

13. The requests for relief of the Respondent were as follows:

“1. Reject the requests for relief submitted by AFC FIORENTINA

2. Rule that AFC FIORENTINA did not comply with prerequisites prescribed by article 12bis of the FIFA RSTP and is prevented from requesting the imposition of sanctions as per said article;

3. Rule that that there is no outstanding payment as per article12 bis of the FIFA RSTP and that article 12bis RSTP is not applicable in the case at hand;

4. Limit the amount to be paid by Red Star to the principal amount EUR 596,797.95 + interests at rate of 6% p.a. as of 10 March 2020

5. Rule that the 20% penalty contained in article 3 of the Settlement is abusive and grossly disproportionate and reject the payment of EUR 119,359.59 corresponding to the delinquency fee;

Alternatively

Rule that the 20% penalty contained in article 3 of the Settlement is grossly disproportionate and reduce the penalty to a proportionate amount not exceeding the amount of 5% over the Outstanding Sum.

6. Reject all further requests for relief;

7. Rule that the parties shall bear their own costs and expenses”.

II.

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

a.

a. Competence and applicable legal frameworkCompetence and applicable legal framework

14. 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 case at hand. In this respect, he took note that the present matter was presented to FIFA on 12 November 2020 and submitted for decision on 26 January 2021. Taking into account the wording of art. 21 of the January 2021 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.

15. Subsequently, the Single Judge referred to art. 3 par. 1 of the Procedural Rules and observed that in accordance with art. 23 par. 1 in combination with art. 22 lit. f) of the Regulations on the Status and Transfer of Players (edition January 2021), he is competent to deal with the matter at stake, which concerns a dispute with an international dimension between two clubs belonging to different associations, i.e. an Italian club and a Serbian club.

16. Subsequently, 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 2 of the Regulations on the Status and Transfer of Player (edition January 2021), and considering that the present claim was lodged on 12 November 2021, the October 2020 edition of said regulations (hereinafter: the Regulations) is applicable to the matter at hand as to the substance.

b.

b. Burden of proofBurden of proof

17. 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.

18. 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.

c. Merits of the disputeMerits of the dispute

19. His competence 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 it will refer only to the facts, arguments and documentary evidence, which he considered pertinent for the assessment of the matter at hand.

i. Main legal discussion and considerations

20. Having stated this, the Single Judge acknowledged that the Claimant and the Respondent signed the settlement agreement, in accordance with which the Claimant was entitled to receive from the Respondent the following:

- EUR 596,767.95 to the Claimant by 30 September 2020 plus 6% interest p.a. as from 10 March 2020 until the date of effective payment;

- A penalty fee of 20% in case of default.

21. The Claimant lodged a claim against the Respondent in front of FIFA, maintaining that the Respondent has overdue payables towards it in the total amount of EUR 596,767.95, corresponding to the amount agreed under the settlement agreement.

22. In this context, the Single Judge took particular note of the fact that, on 8 October 2020, the Claimant put the Respondent in default of payment said amount.

23. Consequently, the Single Judge concluded that the amount claimed had not been overdue for more than 30 days when the Claimant put the Respondent in default, hence not meeting the criteria envisioned by art. 12bis of the Regulations.

24. Subsequently, the Single Judge took into account that the Respondent, for its part and in reply to being informed about the claim of the Claimant, held that it is suffering from financial problems related to the COVID-19 pandemic, and that the penalty/interest rates established under the settlement agreement were disproportionate.

25. In this regard, the Single Judge considered that the circumstances raised by the Respondent cannot be considered a valid reason for non-payment of the monies claimed by the Claimant, in other words, the reasons brought forward by the Respondent in its defence do not exempt the Respondent from its obligation to fulfil its contractual obligations towards the Claimant. More in particular, the Single Judge emphasized that the payment incorrectly made by the Claimant to the Respondent on 10 March 2020 had already occurred in the context of the COVID-19 pandemic, and that the settlement agreement was executed also after the outbreak of the pandemic.

26. What is more, the Single Judge observed that the Respondent (a) acknowledged to have received an amount which did not belong to it, and (b) willingly executed the settlement agreement. The Single Judge was adamant that the Respondent should have returned the amounts to the claimant as soon as it received them by mistake.

27. To this end, the Single Judge confirmed that upholding the position of the Respondent would be to equivalent to endorsing unjust enrichment, something that he evidently could not agree to. Consequently, the Single Judge decided to reject the argumentation put forward by the Respondent in its defence.

28. On account of the aforementioned considerations, the Single Judge established that the Respondent failed to remit to the Claimant EUR 596,767.95, corresponding to the settlement agreement.

29. Subsequently, the Single Judge turned to the matter of the penalty clause and interest rate agreed under the settlement agreement, and concluded in line with the well-established practice of the Players’ Status Committee that neither can be considered excessive as they are proportionate vis-à-vis the principal amount contractually agreed, a contract which was undisputedly freely agreed between the parties.

30. Consequently, the Single Judge decided that, in accordance with the general legal principle of pacta sunt servanda, the Respondent is liable to pay to the Claimant the total amount of EUR 596,767.95 as outstanding remuneration and EUR 119,359.59 as a penalty fee.

31. In addition, taking into account the Claimant’s request as well as the constant practice of the Players’ Status Committee, the Single Judge decided that the Respondent must pay to the Claimant interest of 6% p.a. on the relevant payment as of 10 March 2020 as per the unequivocal contents of the settlement agreement, until the date of effective payment. The Single Judge clarified however that the interest shall not accrue on the penalty fee as per the constant jurisprudence of the Players’ Status Committee.

ii. Compliance with monetary decisions

32. Taking into account the applicable Regulations, 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.

33. 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.

34. 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.

35. 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.

d.

d. CostsCosts

36. The Single Judge referred to article 18 par. 1 lit. i) of the Procedural Rules, according to which “For any claim or counterclaim lodged between 10 June 2020 and 31 December 2020 (both inclusive), no procedural costs shall be levied”. Accordingly, the Single Judge decided that no procedural costs were to be imposed on the parties since the claim was lodged on 12 November 2020.

37. Likewise and for the sake of completeness, the Single Judge recalled the contents of art. 18 par. 4 of the Procedural Rules, and decided that no procedural compensation shall be awarded in these proceedings.

III.

III. DECISIONDECISION OF THE SINGLE JUDGE OF THE PLAYERS' STATUS COMMITTEEOF THE SINGLE JUDGE OF THE PLAYERS' STATUS COMMITTEE

1. The claim of the Claimant, ACF Fiorentina, is partially accepted.

2. The Respondent, FK Crvena Zvezda, has to pay to the Claimant the following amounts:

- EUR 596,797.95 as outstanding remuneration plus 6% interest p.a. as from 10 March 2020 until the date of effective payment;

- EUR 119,359.59 as contractual penalty.

3. Any further claims of the Claimant are rejected.

4. 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.

5. 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).

6. 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.

7. This decision is rendered without costs.

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:

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