F.I.F.A. – Players’ Status Committee / Commissione per lo Status dei Calciatori – overdue payables / debiti scaduti – (2019-2020) – fifa.com – atto non ufficiale – Decision11 September 2019

Decision of the Single Judge

of the Players’ Status Committee

passed on 11 September 2019,

by

Mr Geoff Thompson (England)

Single Judge of the Players’ Status Committee,

on the claim presented by the club,

Club A, Country B

as Claimant

against the club,

Club C, Country D

as Respondent

regarding a contractual dispute

between the parties in connection with overdue payables

I. Facts of the case

1. On 31 January 2019, the Club of Country B, Club A (hereinafter: Claimant), and the Club of Country D, Club C (hereinafter: Respondent) signed a transfer agreement regarding the transfer of the player, Player E (hereinafter: player) from the Claimant to the Respondent.

2. In accordance with the transfer agreement, the Respondent undertook to pay to the Claimant, inter alia, a transfer fee of USD 7,500,000, payable in two instalments, as follows:

- USD 3,750,000 “within next three working days from the date of signing the agreement”;

- USD 3,750,000 due on 15 July 2019.

3. Furthermore, article 10.2 of the transfer agreement stipulates the following: “In the event Club C will not pay any amount due according to this agreement on time, Club C shall pay to Club A 0,1% of amount due per day as the contractual penalty. Apart from the above-mentioned contractual penalty Club A is entitled to seek also a compensation of the harm that was caused as a result of the delay with the payment, and to its whole extent”.

4. By correspondence dated 4 April 2019, the Claimant put the Respondent in default of payment of (a) the first instalment of USD 3,750,000 and (b) the contractual penalty fee as laid down in article 10.2 of the transfer agreement in the amount of USD 333,750, setting a 14 days’ time limit in order to remedy the default.

5. On 29 April 2019, the Claimant lodged a claim against the Respondent in front of FIFA, requesting that the Respondent be ordered to pay to it overdue payables in the amount of USD 3,750,000, corresponding to the first instalment of the transfer fee, as well as the contractual penalty “in the rate 0,1% of the due amount per each and every day of delay for the time period starting on 6th February 2019 and ending on the day the whole amount is paid”.

6. The Claimant further asked that the Respondent be ordered to reimburse the amount of CHF 5,000 as procedural costs to the Claimant.

7. In reply to the claim, the Respondent held that the penalty as laid down in article 10.2 of the transfer agreement is “not fair and reasonable”, as the penalty is “abusive and the excessive amount is null and void”. In conclusion, the Respondent requests to (a) “adopt” the payment of USD 3,750,000 and (b) to apply 5% interest p.a. on the outstanding amount instead of “0.1% of the due amount penalty per day”.

II. Considerations of the Single Judge of the Player’s 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 matter at hand. In this respect, he took note that the present matter was submitted to FIFA on 29 April 2019. Consequently, the 2018 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).

2. 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 2018) he is competent to deal with the present matter, which concerns a dispute between two 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 June 2018), and considering that the present claim was lodged on 29 April 2019, the June 2018 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 acknowledged that the Claimant and the Respondent signed a transfer agreement, in accordance with which the Claimant was entitled to receive from the Respondent, inter alia, the total amount of USD 7,500,000, payable in two instalments of USD 3,750,000 each, respectively payable “within next three working days from the date of signing the agreement” and on 15 July 2019.

6. In addition, the Single Judge acknowledged that the transfer agreement contains a clause stipulating that “In the event Club C will not pay any amount due according to this agreement on time, Club C shall pay to Club A 0,1% of amount due per day as the contractual penalty. Apart from the above-mentioned contractual penalty Club A is entitled to seek also a compensation of the harm that was caused as a result of the delay with the payment, and to its whole extent”.

7. The Single Judge further acknowledged that the Claimant lodged a claim against the Respondent in front of FIFA, maintaining that the Respondent has overdue payables towards it in the amount of USD 3,750,000 corresponding to the first instalment of the transfer fee. Furthermore, the Single Judge noted that the Claimant requested the payment by the Respondent of an additional amount “in the rate 0,1% of the due amount per each and every day of delay for the time period starting on 6th February 2019 and ending on the day the whole amount is paid” as the contractual penalty.

8. In this context, the Single Judge took particular note of the fact that, on 4 April 2019, the Claimant put the Respondent in default of payment of, the aforementioned first instalment as well as the “penalty fee” in the amount of USD 333,750, setting a 14 days’ time limit in order to remedy the default.

9. Consequently, the Single Judge concluded that the Claimant had duly proceeded in accordance with art. 12bis par. 3 of the Regulations, which stipulates that the creditor (player or club) must have put the debtor club in default in writing and have granted a deadline of at least ten days for the debtor club to comply with its financial obligations.

10. Subsequently, the Single Judge took into account that the Respondent, for its part, acknowledged the non-payment of the first instalment of the transfer fee in the amount of USD 3,750,000, but argued that the additional penalty is abusive and excessive. In this regard, the Respondent requested that said penalty would be reduced to an interest rate of 5% p.a.

11. In this regard, the Single Judge noted that the Respondent acknowledged its debt of USD 3,750,000, corresponding to the first instalment, towards the Claimant and did not raise any reason for the non-payment of such amount.

12. On account of the aforementioned considerations, the Single Judge established that the Respondent failed to remit the amount of USD 3,750,000 to the Claimant.

13. In addition, bearing in mind the considerations under numbers II./8. and II./9. above, the Single Judge established that the Respondent had delayed a due payment for more than 30 days without a prima facie contractual basis.

14. 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 overdue payables in the amount of USD 3,750,000.

15. In continuation, the Single Judge focussed his attention on the Claimant’s request for payment of the additional amount “in the rate 0,1% of the due amount per each and every day of delay for the time period starting on 6th February 2019 and ending on the day the whole amount is paid”, in accordance with article 10.2 of the transfer agreement.

16. In this respect, the Single Judge deemed it appropriate to stress that penalty clauses, in principal, 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 the deciding body shall also be taken into consideration.

17. In this regard, the Single Judge outlined that article 10.2 of the transfer agreement, the alleged penalty clause is in fact an interest rate, corresponding to a daily interest of 0.1%, which in turn would correspond to an interest rate of 36.5% per year.

18. As a result, the Single Judge found that such interest rate provided in article 10.2 of the transfer agreement is clearly excessive and disproportionate as per Swiss law and the well-established jurisprudence of the Players’ Status Committee.

19. Taking into account the foregoing circumstances , the Single Judge determined that the relevant interest rate had to be reduced to solely 18% p.a. on the amount of USD 3,750,000, until the date of effective payment, in accordance with Swiss law.

20. Consequently and based on the all the above mentioned circumstances, the Single Judge decided that the club is liable to pay to the player the amount of USD 3,750,000, plus interest at the rate of 18% p.a. as from 6 February 2019.

21. In this regard, the Single Judge wished to highlight that the aforementioned interest at the rate of 18% p.a. on the amount of USD 3,750,000 does not fall within the scope of art. 12bis of the Regulations.

22. Subsequently, the Single Judge decided to reject the Claimant’s request for legal expenses and procedural compensation in accordance with art. 18 par. 4 of the Procedural Rules and the respective longstanding jurisprudence of the Players’ Status Committee in this regard.

23. In continuation, taking into account the consideration under number II./13. above, the Single Judge referred to art.12bis par. 2 of the Regulations which stipulates that any club found to have delayed a due payment for more than 30 days without a prima facie contractual basis may be sanctioned in accordance with art. 12bis par. 4 of the Regulations.

24. The Single Judge established that by virtue of art. 12bis par. 4 of the Regulations he has competence to impose sanctions on the Respondent. The Single Judge further wished to highlight that a repeated offence will be considered as an aggravating circumstance and lead to a more severe penalty in accordance with art. 12bis par. 6 of the Regulations. However, in this regard, the Single Judge recalled that a number of offences in overdue payables matters by the Respondent date back more than two years, which circumstance the Single Judge took into consideration as a mitigating factor when determining the appropriate sanction(s).

25. In this context, the Single Judge highlighted that, within last 2 years, the Respondent had already been found to have delayed a due payment for more than 30 days without a prima facie contractual basis, as a result of which a warning had been imposed on the Respondent by the Single Judge of the Players’ Status Committee with his decision dated 24 June 2019 (Ref. no. XXX).

26. Consequently, bearing in mind all the foregoing considerations, the Single Judge decided to impose a reprimand on the Respondent in accordance with art. 12bis par. 4 lit. b) of the Regulations.

27. Having established the above, 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 proceedings before the Players’ Status Committee including its Single Judge, costs in the maximum amount of CHF 25,000 are levied and which states that 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.

28. Taking into account that the responsibility of the failure to comply with the payment of the amounts as agreed in the transfer agreement can entirely be attributed to the Respondent, the Single Judge concluded that the Respondent has to bear the costs of the current proceedings before FIFA. According to Annexe A of the Procedural Rules, the costs of the proceedings are to be levied on the basis of the amount in dispute. On that basis, the Single Judge held that the amount to be taken into consideration in the present proceedings is USD 3,750,000. Consequently, the Single Judge concluded that the maximum amount of costs of the proceedings corresponds to CHF 25,000.

29. Considering the particular circumstances of the present matter, the Single Judge determined the costs of the current proceedings to the amount of CHF 22,000 and concluded that said amount has to be paid by the Respondent in order to cover the costs of the present proceedings.

30. 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.

31. 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.

32. 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.

33. 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 the Single Judge of the Players’ Status Committee

1. The claim of the Claimant, Club A, is partially accepted.

2. The Respondent, Club C, has to pay to the Claimant overdue payables in the amount of USD 3,750,000, plus 18% interest p.a. as from 6 February 2019 until the date of effective payment.

3. Any further claim lodged by the Claimant is rejected.

4. A reprimand is imposed on the Respondent.

5. The Claimant is directed to inform the Respondent, immediately and directly, preferably to the e-mail address as indicated on the cover letter of the present decision, of the relevant bank account to which the Respondent must pay the amount plus interest mentioned under point III./2. above.

6. The Respondent shall provide evidence of payment of the due amount plus interest in accordance with point III./2. above to FIFA to the e-mail address psdfifa@fifa.org, duly translated, if need be, into one of the official FIFA languages (English, French, German, Spanish).

7. In the event that the amount due plus interest in accordance with point III./2. above are not paid by the Respondent within 45 days as from the notification by the Claimant of the relevant bank details to the Respondent, the Respondent shall be banned 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 (cf. art. 24bis of the Regulations on the Status and Transfer of Players).

8. The ban mentioned in point III./7. above will be lifted immediately and prior to its complete serving, once the due amounts are paid.

9. In the event that the aforementioned sum, plus the relevant interest, 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 FIFA’s Disciplinary Committee for consideration and a formal decision.

10. The final costs of the proceedings in the amount of CHF 22,000 are to be paid by the Respondent, within 45 days of notification of the present decision, as follows:

10.1 The amount of CHF 17,000 has to be paid to FIFA to the following bank account with reference to case no XXX:

UBS Zurich

Account number 366.677.01U (FIFA Players’ Status)

Clearing number 230

IBAN: CH27 0023 0230 3666 7701U

SWIFT: UBSWCHZH80A

10.2 The amount of CHF 5,000 has to be paid to the Claimant.

11. In the event that the aforementioned amount of costs is not paid within the stated time limit, the present matter shall be submitted, upon request, to FIFA’s Disciplinary Committee for consideration and a formal decision

*****

Note relating to the motivated decision (legal remedy):

According to article 58 par. 1 of the FIFA Statutes, this decision may be appealed against before the Court of Arbitration for Sport (CAS). The statement of appeal must be sent to the CAS directly within 21 days of receipt of notification of this decision and shall contain all the elements in accordance with point 2 of the directives issued by the CAS, a copy of which we enclose hereto. Within another 10 days following the expiry of the time limit for filing the statement of appeal, the appellant shall file a brief stating the facts and legal arguments giving rise to the appeal with the CAS (cf. point 4 of the directives).

The full address and contact numbers of the CAS are the following:

Court of Arbitration for Sport

Avenue de Beaumont 2

1012 Lausanne

Switzerland

Tel: +41 21 613 50 00

Fax: +41 21 613 50 01

e-mail: info@tas-cas.org

For the Single Judge

of the Players’ Status Committee:

Emilio García Silvero

Chief Legal & Compliance Officer

Encl: CAS directives