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 23 March 2021

Decision of the

Players Status Committee

passed on 23 March 2021

regarding a contractual dispute concerning the player John Jairo Cifuente Vergara

BY:

Vitus Derungs (Switzerland), Single Judge of the PSC

CLAIMANT / COUNTER-RESPONDENT:

Universidad Católica, Ecuador

RESPONDENT / COUNTER-CLAIMANT:

Pyramids FC, Egypt

I. Facts

1. On 7 December 2018, the parties concluded an agreement for the transfer of the player John Jairo Cifuente Vergara.

2. The contract stipulated, inter alia, the following:

“.. after upon the signature of the Player on the Employment Contract, and the Player agrees to be transferred from the first Party [I.e. the Claimant] in favor of the Second Party, [I.e. the Respondent] and All Parties agree that the Rights in case of sale of the Player shall be transferred to the Second Party in their 90%, and10% is keep it for the first party according to the conditions of this contract and regulations. The percentage kept by the “first party” shall remain during the whole duration of the player’s work relationship with the second party...”

(…)

“The percentage kept by the “first party” shall remain during the whole duration of the player s work relationship with the second party, and it will be the responsibility of the second party to be include it in any renewals, written or agreed upon, or any new contracts the player might sign with the second party. Should the second party oversee, or have the contract forcefully terminated with the third party for any reason, it will automatically become liable and pay the first party the amount of two hundred thousand US Dollars (US$200,000) inmediately.”

3. Item 3: Obligations of the Second Party:

1) Transfer fee: USD 5.000.000 (…) to be paid in two instalments as below:

a. USD 3.000.000 (…) to be paid in 31-12-2018;

b. USD 2.000.0000 (…) to be paid in 30-07-2019;

4. In addition, the contract stipulated the following:

"This amount [is] inclusive of solidarity contribution and the training compensation in accordance with FIFA RSTP."

5. On 8 October 2019, FIFA made a proposal that became binding (TMS 3801) that, for the aforementioned transfer, that the Respondent shall pay USD 54,600, plus 5% interest, to the SD Quito.

6. On 27 February 2020, the FIFA Disciplinary Committee imposed a fine for the non-compliance with the binding proposal in the amount of CHF 7,500.

7. On 14 November 2019, FIFA made a proposal that became binding (TMS 4965) that, for the aforementioned transfer, that the Respondent shall pay USD 21,025, plus 5% interest p.a., to CSD Macara.

8. On 16 December 2019, FIFA made a proposal that became binding (TMS 5062) that, for the aforementioned transfer, that the Respondent shall pay USD 27,675, plus 5% interest, to CD Olmedo

9. On 4 May 2020, the FIFA Disciplinary Committee imposed a fine for the non-compliance with the binding proposal in the amount of CHF 5,000.

10. On 16 August 2019, the player and Pyramids FC signed a mutual termination agreement.

11. On 28 August 2019, the claimant sent a default notice to the respondent stating, inter alia, the following:

“(...) the parties agreed the following: “Should the second party oversee. or have the contract forcefully terminated with the third party for any reason, it will automatically become liable and pay the first party the amount or two hundred thousand US Dollars (US$200,000) immediately

Dated August 16th 2019 Pyramids FC and Mr John Jairo Ci1fuente Vergara signed a Termination Contract by which the relationship was terminated, and the condition established on the document related on the prior paragraph was accomplished.

Due to such reason and based on the events described in this letter the undersigned, acting as President of Club Deportivo Especializado de Alto Rendimiento Univers1dad Cat6hca del Ecuador request immediate payment of the amount of two hundred thousand US Dollars (US$200.000)”

12. On 10 September 2020, the Claimant lodged a claim against the Respondent and requested the following:

USD 200.000, in accordance with the penalty agreed upon the transfer agreement based on Pyramid’s automatically liability for releasing the player

5% interest p.a. as from August 16th, 2019 until date of payment to Universidad Católica.

13. In this respect, the Claimant argued that the termination by mutual agreement between the player and Pyramids makes the latter liable to pay USD 200,000 as agreed in the transfer contract.

14. In its reply to the claim, the Respondent rejected the Claimant’s arguments, and simultaneously lodged a counterclaim.

15. According to the Respondent, the parties agreed that the Claimant would pay the solidarity contribution, but it failed to do so.

16. In this respect, the Respondent explained that it ultimately paid the solidarity contribution following a set of procedures from the training clubs before FIFA, which implied additional costs due to fines imposed by the Disciplinary Committee.

17. In the opinion of the Respondent “this damage (…) would not have resulted, if the Counter-Respondent would have fulfilled his obligations in the agreement from the 7th of December 2018 to pay the solidarity contributions to the claiming third-clubs.”

18. Therefore the Respondent considered that the Claimant shall pay the following amounts, plus 5% interest p.a.:

- USD 55,961 and CHF 7'500,

- USD 22,264,

- USD 29,520 and CHF 5'000,

19. In addition, the Respondent stated that “If the Players' Status Committee, contrary to the expectations of the Counter-Claimant, does not see the Counter-Respondent as obligated to pay the above-mentioned amounts to the Counter-Claimant as requested, the Counter-Respondent is obligated to pay USD 250'000.00 of the transfer fee of USD 5'000'000.00”

20. The Respondent argued that the Respondent never declared himself responsible to keep the Player under con-tract and to include the Claimant into contracts or contract renewals.

21. Therefore, the Respondent argued that, in view of the ban on TPO, “the clause, which ostensibly states that the Respondent should pay USD 200'000.00 to the Claimant, if the Respondent should oversee to include the Claimant in any renewals, written or agreed upon, or any new contracts the Player might sign with the Respondent or have the contract forcefully terminated with the Player, is also invalid.”

22. Furthermore, the Respondent argued that, even if a TPO should be permissible in this case, which is contested, the relevant clauses would obligate the Respondent only to include the Respondent into (a) renewals and (b) new contracts the Player might sign with the Respondent and should the Respondent oversee to include the Claim-ant into a) and b) as just mentioned or (c) have the contract forcefully terminated with the Player, the Respondent should become liable and pay the Claimant the amount of USD 200'000.00. No one of these cases apply to the present case.

23. In this respect, the Respondent underlined that the Claimant acknowledges, that the Respondent and the Player signed a mutual agreement on a voluntary basis.

24. In its replica, Universidad Católica underlined that definition 14 of the RSTP establishes that third parties are “a party other than the player being transferred, the two clubs transferring the plater from one to the other, or any previous club, with which the player has been registered”

25. As a result, Universidad Católica rejected being considered in the context of TPO.

26. In addition, Universidad Católica stated that the disputed clause clearly states the obligation of Pyramids to keep the player under contract and, if the contract is terminated for any reason, it will be responsible for the payment of two hundred thousand dollars.

27. As to the counterclaim, Universidad Católica underlined that Article 2 of annex 5 of the RSTP clearly establishes that the new club is the one who must paythe formation clubs the solidarity contribution, not the previous club.

28. In the opinion of Universidad Católica “Pyramids never informed UC of the payment of the solidarity contribution to the three Ecuadorian clubsuntil theyhad to answer the lawsuit, which shows that it is a clear strategy designed after the lawsuit filed by UC to avoid or reduce the payment of US $ 200,000 dollars”

II. Considerations of the Players Status Committee

1. First of all, the Single Judge of the PSC (hereinafter also referred to as Chamber or DRC) analyzed whether it was competent to deal with the case at hand. 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.

2. Subsequently, the Single Judge of the PSC referred to art. 3 par. 1 of the Procedural Rules and emphasised 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 matters which concern employment-related disputes with an international dimension between clubs belonging to different associations.

3. In continuation, the Single Judge of the PSC analysed 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 the date when the claim was lodged, 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 first noted that the parties at stake concluded an agreement for the transfer of the player John Jairo Cifuentes Vergara from the Claimant to the Respondent stipulating, inter alia, the following:

“Should the second party oversee, or have the contract forcefully terminated with the third party for any reason, it will automatically become liable and pay the first party the amount of two hundred thousand US Dollars (US$200,000) inmediately.”

6. Subsequently, the Single Judge noted that the Claimant lodged a claim before FIFA against the Respondent, requesting the amount of USD 200,000 as stated in the previous paragraph. In particular, the Single Judge observed that, according to the Claimant, the termination by mutual agreement between the player and Pyramids makes the latter liable to pay USD 200,000 as agreed in the transfer contract.

7. Conversely, the Single Judge considered that the aforementioned clause is invalid.

8. In view of the dissent between the parties, the Single Judge considered that the main legal issue at stake is to determine whether the aforementioned clause is applicable, and on which conditions. In doing so, the Single Judge considered that it first had to recall the event that led to the release of the Player from Pyramids FC.

9. In particular, the Single Judge noted that, on 16 August 2019, the player and Pyramids FC signed a mutual termination agreement. The Single Judge observed that this circumstance was acknowledged by all parties.

10. With this context in mind, the Single Judge noted that the disputed clause stipulates a payment only if “[Pyramids] oversee, or have the contract forcefully terminated” (underline added)

11. Yet, given that the player and Pyramids FC terminated their contractual relationship in an amicable manner (by signing a mutual termination agreement), the Single Judge understood that the release of the player cannot be assumed as a “forceful” termination of the contract. Hence, in view of the above, the Single Judge considered, without entering into the issue of the validity of the clause, that the disputed clause cannot be applied in the light of the event that was described above. As a result, the Single Judge rejected the claim of Universidad Católica.

12. Subsequently, the Single Judge turned his attention to the counterclaim lodged by Pyramids FC, by means of which the latter requested a reimbursement of the solidarity contribution for the transfer of the player from Universidad Católica to Pyramids FC, on the basis of the transfer agreement agreed between both clubs, which stipulated that “this amount [is] inclusive of solidarity contribution and the training compensation in accordance with FIFA RSTP.". In particular, the Single Judge noted that Pyramids FC, was of the opinion that Universidad Católica agreed to pay the applicable solidarity contribution, despite being contractually bound to do so.

13. In this respect, the Single Judge referred to art. 21 and art. 1 of Annexe 5 of the Regulations, the latter clearly stipulating that “if a professional moves during the course of a contract, 5% of any compensation, not including training compensation paid to his former club, shall be deducted from the total amount of this compensation and distributed by the new club as a solidarity contribution (…) “ (underline added).

14. In continuation, the Single Judge outlined that the solidarity mechanism is a principle well-established in the Regulations, from which the parties signing a transfer contract cannot derogate through the contents of a contract. In other words, the obligation to distribute solidarity contribution cannot be set aside by means of a contract concluded between the clubs involved in a player’s transfer. What is more, as for the distribution of the solidarity contribution, the amount to be taken into account when calculating the solidarity contribution payments due to the club(s) involved in the player’s training and education, is the amount actually agreed upon as the compensation payable by the new club to the former club, regardless of any provision to the contrary stipulated in the transfer or loan agreement.

15. The Single Judge noted that, in application of the aforementioned considerations, the transfer of the player from Universidad Católica to Pyramids raised three distinct claims for the distribution of the solidarity contribution, with the following consequences, i.e.:

- Under ref. TMS 3801, Pyramids FC had to pay to SD Quito, the amount of USD 54,600, plus 5% interest p.a. as of 30 days as of the due dates;

- Under ref. TMS 4965 Pyramids had to pay to CSD Macara, the amount of USD 21,025, plus 5% interest p.a. as of 30 days as of the due dates;

- Under ref. TMS 5062, Pyramids had to pay to CD Olmedo the amount of USD 27,675 plus 5% interest p.a. as of 30 days as of the due dates

16. In this respect, the Single Judge noted that, as per the applicable Regulations, Pyramids FC, as the player’s new club, had to pay the relevant share of the solidarity contribution.

17. Nevertheless, the Single Judge observed once again that the contract between Pyramids FC and Universidad Católica stipulated that the relevant payments are “inclusive of solidarity contribution and the training compensation in accordance with FIFA RSTP.”

18. Therefore, with due consideration to the above, as well as in consideration of the principle of pacta sunt servanda, the Single Judge referred to the well established jurisprudence of the Dispute Resolution Chamber (DRC) with regard to cases in which the player’s new club does not withhold 5% of the agreed transfer compensation when paying such transfer compensation, but nevertheless is asked to distribute solidarity contribution to the player’s training clubs.

19. According to the mentioned jurisprudence, the player’s new club is ordered to remit the relevant proportion(s) of the 5% solidarity contribution to the club(s) involved in the player’s training and education in strict application of art. 21 and art. 1 and art. 2 of Annexe 5 of the Regulations. At the same time, according to said well-established jurisprudence, the player’s former club is ordered to reimburse the same proportion(s) of the 5% of the compensation that it received from the player’s new club.

20. As a consequence, in application of the principle of pacta sunt servanda, the Single Judge considered that Pyramids FC is entitled to the reimbursement by the Respondent of the amount the Claimant effectively paid as solidarity contribution in accordance with the applicable Regulations, i.e.

- USD 54,600, as reimbursement corresponding to the matter TMS 3801

- USD 21,025, as reimbursement corresponding to the matter TMS 4965

- USD 27,675, as reimbursement corresponding to the matter TMS 5062

21. Moreover, taking into account the request of the Claimant as well as the longstanding jurisprudence in this regard, the Single Judge of the PSC decided to award 5% interest p.a. over said amount as from 31 October 2020.

22. In addition, the Single Judge of the PSC referred to the Covid-19 Football Regulatory Issues – FAQ, published on 11 June 2020 which establish that, given the current circumstances, 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.

23. 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.

24. 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.

25. Therefore, bearing in mind the above, the Single Judge of the PSC 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.

26. Finally, 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 amounts, in accordance with art. 24bis par. 3 of the Regulations.

III. Decision of the Players Status Committee

1. The claim of Universidad Católica, is rejected.

2. The counterclaim of Pyramids FC, is partially accepted.

3. Universidad Católica has to pay to Pyramids FC, the following amounts, plus 5% interest p.a. as from 31 October 2020 until the date of effective payment:

- USD 54,600, as reimbursement corresponding to the matter TMS 3801

- USD 21,025, as reimbursement corresponding to the matter TMS 4965

- USD 27,675, as reimbursement corresponding to the matter TMS 5062

4. Any further claims of the parties are rejected.

5. Pyramids FC is directed to immediately and directly inform Universidad Católica of the relevant bank account to which the Respondent must pay the due amount.

6. Universidad Católica 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).

7. In the event that the amount due, plus interest as established above is not paid by the Universidad Católica within 45 days, as from the notification by Pyramids FC of the relevant bank details, the following consequences shall arise:

1.

Universidad Católica 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.

8. 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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