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 20 October 2020

Decision of the

Single Judge of the Players' Status Committee

passed on 20 October 2020,

regarding a dispute concerning the transfer of the player Carlos Eduardo Ferreira de Souza

BY:

Stefano La Porta (Italy), Single Judge of the PSC

CLAIMANT:

PYRAMIDS FC, Egypt

Represented by Mr Rolf Müller

RESPONDENT:

SE PALMEIRAS, Brazil

Represented by Mr André Sica, Mr Alexandre Miranda and Ms Beatriz Chevis

I. FACTS OF THE CASE

1. On 11 December 2018, the Egyptian club, Pyramids FC, formerly known as Al-Assiouty (hereinafter: the Claimant) and the Brazilian club, SE Palmeiras (hereinafter: the Respondent) signed an agreement regarding the permanent transfer of the player, Carlos Eduardo Ferreira de Souza (hereinafter: the player), from the Claimant to the Respondent.

2. Said transfer agreement established the following:

3. Further, the transfer agreement stipulated:

4. Between 22 December 2019 and 30 March 2020, the parties exchanged correspondence regarding the non-payment of the third instalment of the transfer fee in the amount of USD 2,000,000, which fell due on 15 December 2019.

5. On 19 June 2020, the Claimant lodged a claim against the Respondent, requesting payment of the following monies:

- USD 2,000,000 plus interest of 5% p.a. as of 16 December 2019;

- USD 100,000 as “fine” plus interest of 5% p.a. as of 31 December 2019;

- USD 70,500 plus interest of 5% p.a. as of 16 July 2019;

- USD 3,525 as “fine” plus interest of 5% p.a. as of 31 July 2019.

6. In its claim, the Claimant held that the third instalment in the amount of USD 2,000,000 resulting from the transfer agreement remained outstanding.

7. In this regard, the Claimant acknowledged receipt of the first two instalments, but held that the Respondent did deduct an amount of USD 70,500 of said payments, which is unjustified.

8. Moreover, based on art. 2.2.2. of the transfer agreement, the Claimant requests payment of a fine of 5%, i.e. USD 100,000 (on the amount of USD 2,000,000) and USD 3,525 (on the amount of USD 70,500).

9. In its reply, the Respondent acknowledged having failed to remit the third instalment of the transfer fee, but held facing a financial crisis due to COVID-19, which constitutes a force majeure situation.

10. In this regard, the Respondent argued that due to this extraordinary and unforeseeable situation the principle of clausula rebus sic stantibus shall be applied in order to “adapt the conditions settled by the parties in the transfer agreement”.

11. On account of the above, the Respondent requests to exclude the fine agreed upon the transfer agreement and to declare that the outstanding amount is payable in “at least 6 monthly instalments”.

12. As to the deduction made when remitting the second in instalment of the transfer fee, the Respondent held that even though the parties agreed that the Claimant was responsible for the solidarity contribution (cf. point 3 above), it ignored its obligation to pay the entitled clubs.

13. In this context, the Respondent argued that two clubs claimed its solidarity contribution in a national procedure in Brazil directly by the Respondent and therefore it withheld 5% of the second instalment.

14. The Respondent held that the deduction is valid as the Claimant, even though it got notified by the Respondent, ignored its obligation to pay the solidarity contribution to the entitled clubs.

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

1. First of all, the Single Judge of the Players’ Status Committee (hereinafter: Single Judge) analysed whether he was competent to deal with the present matter. In this respect, he took note that the present matter was submitted to FIFA on 19 June 2020. Taking into account the wording of art. 21 of the June 2020 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 referred to art. 3 paras 2 and 3 of the Procedural Rules and confirmed that in accordance with art. 23 paras 1 and 4 in conjunction with art. 22 lit. f of the Regulations on the Status and Transfer of Players (edition October 2020) he is competent to deal with the matter at stake, which concerns a contractual dispute between clubs affiliated to different associations.

3. 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 (edition October 2020), and considering that the present claim was lodged on 19 June 2020, the June 2020 edition of said regulations (hereinafter: Regulations) is applicable to the matter at hand as to the substance.

4. 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.

5. Having said this, the Single Judge proceeded with an analysis of the circumstances surrounding the present matter, the parties’ arguments as well the documentation on file, bearing in mind art. 12 par. 3 of the Procedural Rules, in accordance with which any party claiming a right on the basis of an alleged fact shall carry the burden of proof.

6. Subsequently, the Single Judge acknowledged that the Claimant and the Respondent signed a transfer agreement on 11 December 2018, regarding the transfer of the player from the Claimant to the Respondent, according to which the Respondent undertook to pay the Claimant the total amount of USD 6,500,000 in three instalments, the last of which, i.e. USD 2,000,000, fell due on 15 December 2019.

7. The Single Judge further took note of the fact that the parties agreed on a penalty of 5% of the outstanding amount in case of late payments (“for more than 15 days”) as per clause 2.2.2. of the transfer agreement.

8. Moreover, the Single judge took notice of the Claimant’s claim lodged against the Respondent in front of FIFA, maintaining that the Respondent failed to remit the third instalment of the in the amount of USD 2,000,000 and deducted USD 70,5000 from the first two instalments of the transfer agreement. Therefore it claimed said amounts as well as 5% as a penalty fee in accordance with clause 2.2.2. of the transfer agreement.

9. Subsequently, the Single Judge took into account that the Respondent, in reply to the claim, did not dispute that the third instalment of the transfer agreement remained outstanding, but argued that due to this extraordinary and unforeseeable situation regarding COVID-19, the principle of clausula rebus sic stantibus shall be applied in order to “adapt the conditions settled by the parties in the transfer agreement”. In this regard, the Respondent requests to exclude the fine agreed upon the transfer agreement and to declare that the outstanding amount is payable in “at least 6 monthly instalments”.

10. As to the deduction made when remitting the second in instalment of the transfer fee, the Single Judge noted the Respondent’s argument that even though the parties agreed that the Claimant was responsible for the solidarity contribution, it ignored its obligation to pay the entitled clubs.

11. Subsequently, the Single Judge turned his attention to the substance of the matter, and recapitulated that the parties agreed on a transfer fee of USD 6,500,000, payable in three instalments. The third instalment of USD 2,000,000 fell due on 15 December 2019.

12. Having said that, the Chamber wished to refer to the fact that, in light of the worldwide COVID-19 outbreak, FIFA issued a set of guidelines, the COVID-19 Guidelines, which aim at providing appropriate guidance and recommendations to member associations and their stakeholders, to both mitigate the consequences of disruptions caused by COVID-19 and ensure that any response is harmonised in the common interest. Moreover, on 11 June 2020, FIFA has issued an additional document, referred to as FIFA COVID-19 FAQ, which provides clarification about the most relevant questions in connection with the regulatory consequences of the COVID-19 outbreak and identifies solutions for new regulatory matters.

13. For this dispute. it is important to note that based on the COVID-19 Guidelines, as well as the FIFA FIFA COVID-19 FAQ, the COVID-19 outbreak is not a force majeure situation in any specific country or territory. What is more, the COVID-19 Guidelines do not exempt a club from complying with its contractual obligations.

14. In this context, the Single Judge considered that the arguments raised by the Respondent in connction with COVID-19 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.

15. Regarding the deduction made by the Respondent in connection with the second instalment, the Single Judge observed that the transfer agreement is clear that no deductions shall be made. What is more, the Respondent submitted allegations that claims regarding solidarity contribution were lodged against it in Brazil. The Single Judge also noted that the Respondent did not submit any evidence that it remitted solidarity contribution to entitled clubs.

16. On account of the above, taking into account the fact that the Respondent did not dispute that the second instalment remained outstanding nor that it deducted the amount claimed from the second instalment, the Single Judge considered that the circumstances raised by the Respondent cannot be considered a valid reason for non-payment of the monies, 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.

17. Further, the Single Judge addressed the matter of the penalty the parties contractually agreed upon per clause 2.2.2. of the transfer agreement.

18. After due deliberation, 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.

19. In the specific case at hand, the Single Judge deemed that a penalty corresponding to 5% of the outstanding amount, which the parties contractually agreed upon, is both proportionate and reasonable in the case at hand.

20. On account of all of the above, the Single Judge decided that the penalty is valid and applicable in the present matter.

21. Consequently, the Single Judge decided to reject the argumentation put forward by the Respondent in its defence.

22. On account of the aforementioned considerations, the Single Judge established that the Respondent failed to pay the Claimant the total amount of USD 2,070,500, corresponding to the third instalment of the transfer fee as well as the deductions made from the second instalment. As such, the Single Judge decided that the Respondent has to pay the Claimant the contractual penalty of USD 103,525.

23. 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 USD USD 2,070,500 as well as USD 103,525.

24. In addition, taking into consideration the Claimant’s claim, the Single Judge decided to award the Claimant interest at the rate of 5% p.a. on the amount of USD 2,000,000 as of the day following the day on which the third instalment fell due, i.e. 16 December 2019 and on the amount of USD 70,500 as of 16 July 2019.

25. In accordance with the long-standing jurisprudence of the Dispute Resolution Chamber and the Players’ Status Committee, no interest is granted for the contractual penalty.

26. What is more, taking into account the consideration under number II./3. 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.

27. 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.

28. 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.

29. 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 THESINGLE JUDGE OF THE PLAYERS' STATUS COMMITTEE

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

2. The Respondent, SE Palmeiras has to pay to the Claimant, the following amounts:

- USD 2,000,000 plus 5% interest p.a. as from 16 December 2019 until the date of effective payment;

- USD 70,500 plus 5% interest p.a. as from 16 July 2019 until the date of effective payment;

- USD 103,525 as 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. The final costs of the proceedings in the amount of CHF 5,000 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:

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