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 29 September 2020

Decision of the

Single Judge of the PSC

passed on 29 September 2020

regarding a contractual dispute concerning the player Jose Fernando Viana de Santana

COMPOSITION:

Roy Vermeer (Netherlands), Single Judge of the PSC

CLAIMANT:

AL WEHDAH SC, Saudi Arabia

RESPONDENT:

EC BAHIA, Brazil

Represented by Mr Milton Jordao

I. Facts

1. On 10 January 2019, the Claimant and the Respondent concluded an agreement (hereinafter: the transfer agreement) on the permanent transfer of the player, Jose Fernando Viana de Santana, from the former to the latter.

2. Clause 3.1 of the transfer agreement reads as follows:

“Transfer Fee: USD 1,163,158 (One million One Hundred Sixty Three Thousand One Hundred Fifty Eight US Dollars), and that, after deduction of the 5% of solidarity contribution that Bahia will pay to the clubs entitled to it, the net of USD 1,100,000 (One million One Hundred Thousand US Dollars) to be paid to Al Wehdah in three instalments as below:

a. USD 450,000 (Four Hundred Fifty Thousand US Dollars) to be paid in 01-05-2019.

b. USD 450,000 (Four Hundred Fifty Thousand US Dollars) to be paid in 10-10-2019.

c. USD 200,000 (Two Hundred Thousand US Dollars) to be paid in 10-01-2020.”

3. Moreover, clause 3.2 of the transfer agreement states the following:

“In case [the Respondent] fail[s] to pay the amounts that mentioned in item 3-1-a, 3-1-b and 3-1-c, in the agreed terms, the second party will accept and pay immediately, a 15% annual interest until the amount is covered. The interest will be calculated starting at the 15 working day from the receipt of the default noticed by the first party”.

4. On 15 December 2019, the Claimant put the Respondent in default of payment –in writing– regarding the second and third instalments of the transfer agreement in the amounts of USD 450,000 and USD 200,000, respectively. By beans of the said letter, the Claimant unilaterally granted the Respondent new time-limits for the latter to comply with the payment of the second and third instalment of the transfer agreement as follows:

- USD 250,000 until 20 December 2019;

- USD 200,000 until 30 January 2020.

5. On 17 February 2020, the Claimant put the Respondent in default of payment, requesting the latter to proceed with the payment of USD 400,000, corresponding to the unpaid part of the second instalment and the full third instalment of the transfer fee.

6. On 2 March 2020, the Claimant sent a default notice to the Respondent, requesting the payment of the third instalment of the transfer fee, i.e. USD 200,000, before 12 March 2020.

7. In its claim, the Claimant argued that the Respondent failed to comply with certain payments agreed upon in the transfer agreement. In this context, the Claimant held that the Respondent was supposed to remit USD 63,158 as solidarity contribution to the Claimant, who was supposed to distribute it to the entitled clubs. According to the Claimant, said payment was not remitted by the Respondent and the Claimant had to pay solidarity contribution on behalf of the Respondent.

8. Furthermore, the Claimant maintained that the Respondent had remitted only the first instalment of the transfer fee as well as partial payment of the second instalment, in the amount of USD 250,000, which was remitted on 20 December 2019. Thus, according to the Claimant, the amount of USD 400,000 is still outstanding.

9. In its request for relief, the Claimant requested to be awarded outstanding remuneration in the amount of USD 464,807.68, broken down by the latter as follows:

- UD 200,000 corresponding to the unpaid part of the second instalment of the transfer compensation, plus 15% interest p.a. as from 30 January 2020 until the date of effective payment;

- USD 200,000 corresponding to the third instalment of the transfer compensation, plus 15% interest p.a. as from 17 March 2020 until the date of effective payment;

- USD 64,807.68 corresponding to “the full amount of the Solidarity Contribution the Respondent failed to pay”.

10. In addition to the above, the Claimant requested the Respondent be ordered “to pay all administrative and procedural costs as well as all legal fees and expenses”.

11. In its reply to the claim, the Respondent claims that it faced unexpected situations and financial difficulties which “disturbed the financial goals and obligations the club agreed to fulfil previously”.

12. In addition, the Respondent argued that “during the same period, the club was surprised with the Pandemic of COVID-19. The Defendant is fighting against a wave of losses and financial damages in which forced the club to reduce salaries, appeal for governmental aids, reshuffling the resources in order to protect approximately 400 (four hundred) families that depends directly on the club. The club resorted to collective agreement assisted by the respective employees’ unions, with former players, coaching staff, the professional team, and all employees, including the executive board that is not receiving remuneration since March”.

13. Furthermore, “the Defendant completely recognizes the debt with the Claimant regarding the transfer of the player and respectfully wants to fulfill its financial obligations”. In a sign of good faith, the Respondent always remained in written contact with the Claimant, with respect to its debt.

14. The Respondent also alleges that “the main income sources of revenues for a football club in Brazil basically rests in: broadcasting rights; the paying crowd of each sports events related to the club; Membership program for the fan base; Sponsorship; and, selling and buying professional players. During the pandemic, all sectors of sources have been affected voraciously. Since March on the beginning of the pandemic effects, the club had a revenue shortfall decreasing more than 80% of its income sources. The president Guilherme Bellintani exposed this harsh situation during a hearing with the creditors of the club that not only believed in his speech and proofs but also exempted the club from paying the amount of debts that were being refunded monthly, suspending the payments of April, May, June and July”.

15. The Respondent therefore proposed to pay the due amount in 10 equal instalments of USD 40,000 each, which would be payable on the last day of each month, as from July 2020. The Respondent provided proof of payment of the amount of USD 40,000 as the first instalment due in July 2020.

16. In addition, the Respondent claims to be an irreproachable payer and requested art. 12bis of the RSTP to not be applied in the present case. In case FIFA decides to apply the aforementioned article, the club deems that it should only be imposed a warning.

17. The Respondent also deems that the amount of USD 64,807.68, corresponding to the reimbursement of the payment of solidarity contribution is not due to the Claimant, since this amount cannot be inferred as due to the training clubs as per the player’s passport.

18. Finally, the Respondent deems that interest should be reduced to 5% p.a. since 15% p.a., as agreed in the contract, is manifestly disproportionate, as per FIFA’s jurisprudence.

II. Considerations of the Single Judge of the PSC

1. First of all, the Single Judge of the PSC (hereinafter also referred to as the Single Judge) analyzed whether it was competent to deal with the case at hand. 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 of the PSC referred to art. 3 par. 1 of the Procedural Rules and emphasized that, in accordance with art. 24 par. 1 in combination with art. 22 lit. f) of the Regulations on the Status and Transfer of Players, the Single Judge of the PSC is competent to deal with disputes between clubs belonging to different associations.

3. In continuation, the Single Judge of the PSC analyzed which edition of the Regulations of the Status and Transfer of Players should be applicable to the present matter. In this respect, the Single Judge of the PSC confirmed that in accordance with art. 26 par. 1 and 2 of the Regulations on the Status and Transfer of Players, and considering that the claim was lodged on 19 June 2020, the June 2020 edition of the aforementioned regulations (hereinafter: the Regulations) is applicable to the matter at hand.

4. With the above having been established, the Single Judge of the PSC entered into the substance of the matter. In doing so, it started to acknowledge the facts of the case as well as the documents contained in the file. However, the Single Judge of the PSC emphasized that in the following considerations it will refer only to facts, arguments and documentary evidence which it considered pertinent for the assessment of the matter at hand.

5. In this respect, the Single Judge noted that, on 10 January 2020, the parties concluded an agreement for the permanent transfer of the player, Jose Fernando Viana de Santana, from the Claimant to the Respondent, against payment of a transfer compensation that amounted to USD 1,100,000, which was payable in 3 different instalments, as follows:

- USD 450,000 by 1 May 2019;

- USD 450,000 by 10 October 2019;

- USD 200,000 by 10 January 2020.

6. Subsequently, the Single Judge noted that, by means of its letter dated 15 December 2019, the Claimant granted the Respondent an extension of deadline regarding the payment of the second and the third instalments of the transfer compensation, as follows: the amount of USD 250,000 –corresponding to the second instalment– would be payable by 20 December 2019; and the amount of USD 200,000 –corresponding to the third instalment– would be payable by 30 January 2020.

7. The Single Judge further noted that the Claimant put the Respondent in default of payment on 17 February 2020 and 2 March 2020 in connection with the second and third instalment of the transfer agreement. In this respect, the Single Judge noticed that, only in its notice of 2 March 2020, the Claimant granted the Respondent a deadline to remedy its default. In particular, the Single Judge noted that, thereby, the Claimant granted the Respondent a 9 days´ deadline in order for the Respondent to comply with its financial obligations towards the Claimant.

8. Moreover, the Single Judge noted that the Respondent proceeded to make partial payments of the overdue amounts. In particular, the Single Judge duly noted that –as acknowledged by the Claimant– the Respondent made 3 partial payments in favor of the Claimant in the total amount of USD 289,893.

9. In this context, the Single Judge observed that, on 19 June 2020, the Claimant lodged a claim before FIFA –which was subject of further amendments whereby the Claimant acknowledged the partial payments made by the Respondent in the total amount of USD 289,893–, whereby the Claimant requested to be awarded outstanding remuneration in the amount of USD 424,914.68, plus 15% interest p.a., corresponding to the following considerations: the unpaid part of the second instalment of the transfer compensation in the amount of USD 160,107, the fully unpaid third instalment thereof in the amount of USD 200,000, and the amount of USD 64,807.68, which was allegedly paid by the Claimant to the former training clubs on behalf of the Respondent as solidarity contribution.

10. In this context, the Single Judge turned his attention to the argumentation of the Respondent, who argued that the lack of payment was a consequence of the situation of financial distress through which the club underwent as a consequence of the Covid-19 pandemic. In particular, the Single Judge noted that the Respondent maintained that its revenues decreased more than 80% during the said period.

11. In addition to the above, the Single Judge noted that the Respondent proposed a payment plan in accordance with which the Respondent suggested paying the overdue amounts to the Claimant in monthly instalments.

12. Moreover, the Single Judge noted that, as to the Claimant´s request regarding the payment of USD 64,807.68 as reimbursement of the amount allegedly paid by the Claimant as solidarity contribution to the former training clubs with which the player was registered, the Respondent held that it is not due to the Claimant, since that amount cannot be inferred as due to the training clubs as per the player’s passport.

13. The Single Judge further noted that the Respondent contested the applicability of the default interest requested by the Claimant, i.e. 15% p.a. on the overdue amounts, since the former considered the said rate to be disproportionate.

14. Having analyzed the positions of both parties, the Single Judge firstly referred to the arguments raised by the Respondent regarding its situation of financial distress and invoked the content of the Covid Guidelines issued by FIFA in April 2020, in accordance with which the pandemic situation cannot be automatically considered as a force majeure event in order to exempt clubs from financial obligations assumed towards other clubs.

15. In this context, the Single Judge stressed that, since it remained uncontested that the Respondent failed to make the payment of the second instalment (partially) and third instalment of the transfer compensation in the amount of USD 360,107 (450,000 -289,893 = 360,107), which was due as per the transfer agreement concluded between the parties, the Respondent shall be condemned to pay to the Claimant the amount of USD 360,107 in application of the legal principle of law, pacta sunt servanda.

16. In connection with the amount of USD 64,807.68, requested by the Claimant as reimbursement of the amount paid by the latter to the former training clubs of the player on behalf of the Respondent, as solidarity contribution, the Single Judge determined that the Claimant, despite carrying the burden of the proof, failed to provide sufficient evidence as to having proceeded with the payment of the said amount, as solidarity contribution, in favor of the former clubs with which the player was registered. In this respect, the Single Judge made reference to the documentary evidence provided by the Claimant, i.e. a bank statement indicating the alleged transfer of such amount to a law office in Brazil, and held that the said evidence did not proof with sufficient certainty that the said payment had the consideration argued by the Claimant. Hence, the Single Judge determined that such request could not be upheld.

17. Moreover, the Single Judge referred to the 15% interest p.a. requested by the Claimant ex. clause 3.2 of the transfer agreement and stated that, insofar the requested default interest at the rate of 15% p.a. has a contractual basis (clause 3.2 of the transfer agreement) and the latter is below the maximum default interest permitted in accordance with Swiss Law and the jurisprudence of the Players´ Status Committee, i.e. 18% p.a., the requested default interest shall be granted to the Claimant on the overdue amounts.

18. The above being clarified, the Single Judge referred to the wording of clause 3.2 of the transfer agreement and concluded that, insofar the Claimant put the Respondent in default of payment, for the first time, on 17 February 2020, the said date shall serve as dies a quo for the calculation of the 15 days´ deadline provided by clause 3.2 of the transfer agreement. In this sense, the Single Judge determined that interest shall run 15 days after the said date, i.e as from 9 March 2020.

19. Thus –concluded the Single Judge–, the Claimant shall be awarded outstanding remuneration in the amount of USD 360,107, plus 15% interest p.a. on the said amount as from 9 March 2020 until the date of effective payment.

20. In continuation, the Single Judge of the PSC 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 Dispute Resolution Chamber relating to disputes regarding solidarity mechanism 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.

21. In this respect, the Single Judge of the PSC referred to the Covid-19 Football Regulatory Issues – FAQ, published on 11 June 2020 which establish that, for any claim lodged between 10 June 2020 and 31 December 2020 (both inclusive), there will be no requirement to pay an advance of costs and no procedural costs shall be ordered.

22. Furthermore, taking into account the previous considerations, the Single Judge of the PSC 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.

23. In this regard, the Single Judge of the PSC 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.

24. Therefore, bearing in mind the above, the Single Judge of the PSC decided that, in the event that the Respondent does not pay the interest 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.

25. In this respect, the Single Judge of the PSC recalled that the above-mentioned ban will be lifted immediately and prior to its complete serving upon payment of the due amount, in accordance with art. 24bis par. 3 of the Regulations.

26. Finally, the Single Judge of the PSC finished his deliberations by stating that any further claim lodged by the Claimant is rejected and determining that the claim of the Claimant is, therefore, partially accepted.

III. Decision of the Single Judge of the PSC

1. The claim of the Claimant, Al Wehdah SC, is partially accepted.

2. The Respondent, EC Bahia, has to pay to the Claimant, the following amount:

- USD 360,107 plus 15% interest p.a. as from 9 March 2020 until the date of effective payment.

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 present decision is rendered free of 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).

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