F.I.F.A. – Dispute Resolution Chamber / Camera di Risoluzione delle Controversie – labour disputes / controversie di lavoro (2016-2017) – fifa.com – atto non ufficiale – Decision 18 August 2016

Decision of the Dispute Resolution Chamber

passed in Zurich, Switzerland, on 18 August 2016,

in the following composition:

Thomas Grimm (Switzerland), Deputy Chairman

Joaquim Evangelista (Portugal), member

Johan van Gaalen (South Africa), member

Todd Durbin (USA), member

Zola Majavu (South Africa), member

on the matter between the player,

Player A, country B

as Claimant

and the club,

Club C, country D

as Respondent

regarding an employment-related dispute

arisen between the parties

I. Facts of the case

1. On 19 July 2014, the player from country B, Player A (hereinafter: the Claimant), concluded an employment contract (hereinafter: the contract) with the club from country D, Club C (hereinafter: the Respondent), valid as from 15 July 2014 until 14 June 2016.

2. According to the second clause of the contract, the Claimant was entitled to receive the total amount of USD 900,000, payable as follows:

- USD 150,000, on 1 September 2014;

- USD 150,000, on 1 October 2014;

- USD 250,000, for the season 2014/2015, “distributed monthly” in the amount of USD 22,727 each (i.e. eleven instalments) ;

- USD 350,000, for the season 2015/2016, “distributed monthly” in the amount of USD 35,000 each (i.e. ten instalments).

3. In addition, the fifth clause of the contract stipulated the following:

“1-1- The [Claimant] is subject to technical evaluation of the [Respondent].

The [Respondent] shall have the right to terminate this contract based on the technical report at any time by notice in writing. Then, [the Respondent] shall pay compensation for cancellation of the contract equal to only two month salary of the remaining salaries from the contract value.”

4. On 27 February 2015, the Claimant lodged a claim before FIFA against the Respondent for breach of contract without just cause, and requested the payment of the following amounts:

- USD 20,454.29 corresponding to the outstanding portion of the salary of December 2014, plus 5% interest as from 28 December 2014;

- USD 415,664.18, as compensation for breach of contract without just cause, calculated as follows:

A

Residual value of the contract:

- USD 3,030.27, corresponding to the four last days of December 2014;

- USD 113,635, corresponding to five remaining monthly salaries for the 2014/2015 season (i.e. USD 22,272 for each instalment);

- USD 350,000, for the entire 2015/2016 season.

Total:

USD 466,665.27

B

Mitigation

(from 14 January 2015

20,000, equivalent according to the Claimant, to USD 6,955.48 until 30 November 2015, cf. point I. 8 below)

USD 6,955.48*10 + USD 4,173.29 (corresponding to 18 days of January 2015)=

Total:

USD 73,728.08

C

Subtotal

(residual value – mitigation)

USD 392,937.19

D

Compensation for the ITC refusal (specificity of sport, cf. point I. 8 below)

USD 22,727.00

TOTAL (C+D)

“USD 415,664.18”

- EUR 570,000, corresponding to “additional compensation” for damages and equivalent to six months of salary.

5. Furthermore, “ad cautelam” and “ad argumentandum”, the Claimant requested, in the event that the fifth clause of the contract is considered as valid, to be awarded with the amount of USD 68,181 as compensation (i.e. two months of salaries + compensation for the refusal of the ITC).

6. According to the Claimant, the Respondent terminated the contract on 28 December 2014 by means of a termination letter dated 27 December 2014. In particular, and following the contents of said letter, the Respondent terminated the contract in accordance with the fifth clause of the contract (cf. point I.3 above) and due to the Claimant’s failure “to demonstrate [his] abilities to catch up with colleagues first team”.

7. In this regard, the Claimant was of the opinion that the Respondent had no just cause for the termination of the contract, and quoted jurisprudence both from the DRC and the Court of Arbitration for Sport (CAS) in support of his arguments.

8. Subsequently, the Claimant explained that he concluded a contract with the club from country B, Club E, valid as from 14 January 2015 until 30 November 2015. In this regard, the Claimant stated that, initially, on 1 February 2015, the Football Association of country D declined to issue his International Transfer Certificate (ITC) due to the “non-expiration of the contract with the previous club”.

9. In connection with the aforementioned statement, the Claimant considered that the Respondent was “trying to fabricate (…) unlawful excuses (…) by stating that the [Claimant] abandoned the [Respondent] without [its] previous consent and entered into an agreement with another club without [its] authorization”. In particular, the Claimant insisted that the contract with the Respondent was already terminated on 28 December 2014.

10. In its reply, the Respondent confirmed that the contract was terminated on 27 December 2014 on the basis of the fifth clause of the contract. In particular, the Respondent explained that, on 23 October 2014, it warned the Claimant about his “low performance” and that it granted him two months in order to improve his level. In particular, the Respondent considered that, following the terms of the contract, it was entitled to unilaterally terminate the contract and that it is “usual” in the country D to terminate a contract due to a player’s poor performance, which is considered as an “insult” towards a club. Moreover, the Respondent considered that it was entitled to receive compensation from the Claimant.

11. Notwithstanding the above, the Respondent considered that the Claimant was not entitled to receive his ITC since he left the Respondent without its permission after the termination of the contract.

12. In sum, the Respondent offered to pay two months of salaries to the Claimant as compensation for the termination of the contract, but requested the latter to “apologize”.

13. In his replica, the Claimant noted the “very confusing” nature of the Respondent’s reply, and confirmed his initial statement and insisted that the Respondent unilaterally terminated the contract without just cause on 27 December 2014. In particular, the Claimant considered that the fifth clause of the contract should be deemed as invalid.

14. In reference to the amount due as compensation, the Claimant considered that, even though the second clause of the contract stipulated two months of compensation, said clause is “immoral” and abusive since it grants disproportionate rights to the Respondent.

15. Moreover, the Claimant explained that, as a statement of good will, on 11 February 2015, he offered to the Respondent to settle the matter in an amicable manner for the total amount of USD 73,075. However, the Claimant considered that the Respondent continued to act in bad faith by not assisting him in the delivery of the ITC.

16. In addition, the Claimant considered that, following the termination of the contract, he was not bound by it anymore and that, consequently, he was free to leave the country D at any moment.

17. As final comments, the Respondent confirmed its previous views on the termination of the contract, and insisted that, as stipulated in the contract, the Claimant is entitled to only two months of salary as compensation. In addition, the Respondent explained that, following the termination of the contract on 27 December 2014, the Claimant left the country D without trying to reach an amicable settlement and “without written authorization from the Respondent”.

18. Finally, the Claimant informed FIFA about his subsequent employment situation, as follows:

- From 14 January 2015 until 30 November 2015, he was employed by the club from country B, Club E, for a monthly salary of 20,000;

- From 1 December 2015 until 31 January 2016, the Claimant declared that he remained unemployed;

- From 1 February 2016 until 29 February 2016, the Claimant stated that he was employed by the club from country B, Club F, for a monthly salary of 11,000;

- From 1 March 2016 until 14 June 2016, the Claimant declared that he remained unemployed.

II. Considerations of the Dispute Resolution Chamber

1. First of all, the Dispute Resolution Chamber (hereinafter also referred to as DRC or Chamber) analysed whether it was competent to deal with the case at hand. In this respect, it took note that the present matter was submitted to FIFA on 27 February 2015. Consequently, the 2014 edition of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (hereinafter: the Procedural Rules) is applicable to the matter at hand (cf. art. 21 of the 2014 and 2015 editions of the Procedural Rules).

2. Subsequently, the members of the Chamber referred to art. 3 par. 1 of the Procedural Rules and confirmed that in accordance with art. 24 par. 1 in combination with art. 22 lit. b of the Regulations on the Status and Transfer of Players, (edition 2016), the Dispute Resolution Chamber is competent to deal with the matter at stake, which concerns an employment-related dispute with an international dimension between a player from country B and a club from country D.

3. The competence of the Chamber having been established, the Chamber analysed which edition of the Regulations on the Status and Transfer of Players should be applicable as to the substance of the matter. In this respect, it confirmed that, in accordance with art. 26 par. 1 and 2 of the Regulations on the Status and Transfer of Players (editions 2014, 2015 and 2016), and considering that the present matter was submitted to FIFA on 27 February 2015, the 2014 edition of the aforementioned regulations (hereinafter: the Regulations) is applicable to the matter at hand as to the substance.

4. Having established the foregoing, and entering into the substance of the matter, the Chamber continued by acknowledging the above-mentioned facts as well as the documentation contained in the file in relation to the substance of the matter. However, the Chamber emphasised that in the following considerations it will refer only to the facts, arguments and documentary evidence which it considered for the assessment of the matter at hand.

5. In this respect, the Chamber acknowledged that the parties to the dispute had signed an employment contract on 19 July 2014, valid as from 15 July 2014 until 14 June 2016.

6. Subsequently, the Chamber noted that the Claimant lodged a claim against the Respondent, maintaining that the latter had unilaterally terminated the employment contract on 28 December 2014 by means of a termination letter dated 27 December 2014, in accordance with the fifth clause of the contract (cf. point I.3 above) and due to the Claimant’s alleged failure “to demonstrate [his] abilities to catch up with colleagues first team”. Consequently, the Claimant asks to be awarded his outstanding dues as well as the payment of compensation for breach of the employment contract.

7. In this respect, the members of the Chamber took note of the Respondent’s position, which confirmed that it terminated the contract on 27 December 2014 for alleged low performance in accordance with the stipulations contained in its fifth clause.

8. Having established the foregoing, the Chamber turned its attention to the question as to whether the contract had been terminated by the Respondent with or without just cause.

9. In this context, the Chamber turned its attention to the fifth clause of the employment contract, which was invoked by the Respondent in the termination letter as well as in its defence.

10. As stated above, according to the fifth clause of the employment contract “The [Respondent] shall have the right to terminate this contract based on the technical report at any time by notice in writing. Then, [the Respondent] shall pay compensation for cancellation of the contract equal to only two month salary of the remaining salaries from the contract value.”

11. In this respect, the Chamber held that it could not accept said article as being valid, as it provides for a unilateral termination right that is based on a purely one-sided and subjective evaluation allegedly made by the Respondent.

12. In addition to the unilateral character of said clause, the Chamber pointed out that, in accordance with its longstanding jurisprudence and as a general principle, a player cannot be dismissed for alleged poor performance. Thus, the Chamber emphasised that poor or unsatisfactory performance cannot be considered as a just cause to terminate a contract. Hence, the Chamber considered that by terminating the contract based on poor performance, the Respondent acted in an abusive manner and without just cause.

13. In view of the aforementioned, the Chamber stated that the unilateral termination of the employment contract on 27 December 2014 by the Respondent constitutes a breach of contract without just cause.

14. In this respect, the DRC took into consideration that according to the Claimant, the Respondent had failed to pay his remuneration in the total amount of USD 20,454.29, corresponding to the unpaid portion of his salary of December 2014. Consequently, the Claimant requested to be awarded with the payment of the total amount of USD 20,454.29.

15. In this regard, the members of the Chamber observed that, at the date of the termination of the contract, i.e. 27 December 2014, and in the absence of any other specific stipulation, said monthly salary had not yet fallen due. Consequently, the members of the Chamber unanimously decided to reject the Claimant’s request in this respect, notwithstanding its possible consideration as compensation.

16. Subsequently, the Chamber observed that, taking into consideration art. 17 par. 1 of the Regulations, the Claimant is entitled to receive from the Respondent compensation for breach of contract in addition to the outstanding salaries on the basis of the relevant employment contract.

17. In continuation, the Chamber outlined that, in accordance with said provision, the amount of compensation shall be calculated, in particular and unless otherwise provided for in the contract at the basis of the dispute, with due consideration for the law of the country concerned, the specificity of sport and further objective criteria, including, in particular, the remuneration and other benefits due to the Claimant under the existing contract and/or the new contract, the time remaining on the existing contract up to a maximum of five years, and depending on whether the contractual breach falls within the protected period.

19. In application of the relevant provision, the Chamber held that it first of all had to clarify whether the pertinent employment contract contained any clause, by means of which the parties had beforehand agreed upon a compensation payable by the contractual parties in the event of breach of contract. In this regard, the members of the Chamber noted that, indeed, the fifth clause of the contract stipulated a compensation clause, which was drafted as follows:

“The [Respondent] shall have the right to terminate this contract based on the technical report at any time by notice in writing. Then, [the Respondent] shall pay compensation for cancellation of the contract equal to only two month salary of the remaining salaries from the contract value.”

20. In this regard, the members of the Chamber observed that said clause established a compensation in favour of the Claimant only for the specific cause of termination drafted in said clause, i.e. a termination based on the Claimant’s alleged poor performance. In particular, the members of the Chamber wished to emphasize the use of the word “then” in the aforementioned clause, which clearly established a connection between the termination of the contract on the grounds of the Claimant’s alleged poor performance and the compensation payable by the Respondent.

21. However, as previously observed, said cause for termination cannot be considered as valid. Therefore, the members of the Chamber unanimously agreed that, as a logical consequence, any related form of compensation that may derive from it should also be disregarded. Therefore, the members of the Chamber unanimously agreed that said clause cannot be taken into consideration in the determination of the amount of compensation.

22. As a consequence, the members of the Chamber determined that the amount of compensation payable by the Respondent to the Claimant had to be assessed in application of the other parameters set out in art. 17 par. 1 of the Regulations. The Chamber recalled that said provision provides for a non-exhaustive enumeration of criteria to be taken into consideration when calculating the amount of compensation payable. Therefore, other objective criteria may be taken into account at the discretion of the deciding body.

23. Bearing in mind the foregoing as well as the claim of the Claimant, the Chamber proceeded with the calculation of the monies payable to the Claimant under the terms of the employment contract until 14 June 2016 (i.e. the original date of termination of the contract). In this regard, the members of the Chamber observed, as detailed above, that under the contract, the Respondent agreed to pay to the Claimant the total amount of USD 250,000, for the season 2014/2015, “distributed monthly” in the amount of USD 22,727 each (i.e. eleven instalments), as well as the amount of USD 350,000, for the season 2015/2016, “distributed monthly” in the amount of USD 35,000 each (i.e. ten instalments).

24. Consequently, the Chamber concluded that the amount of USD 486,362 (i.e. remuneration as from 1 December 2014 until 14 June 2016, incl. the unpaid salary of December 2014) serves as the basis for the determination of the amount of compensation for breach of contract.

25. In continuation, the Chamber verified as to whether the Claimant had signed an employment contract with another club during the relevant period of time, by means of which he would have been enabled to reduce his loss of income. According to the constant practice of the DRC, such remuneration under a new employment contract shall be taken into account in the calculation of the amount of compensation for breach of contract in connection with the Claimant’s general obligation to mitigate his damages.

26. In this regard, the DRC remarked that, following the termination of the contract by the Respondent, the Claimant had concluded a new employment with the clubs from country B, Club E and Club F, which respectively ran from 14 January 2015 until 30 November 2015 and from 1 February 2016 until 29 February 2016. In this respect, the members of the DRC established that, accordingly, the Claimant would have earned from said contracts the amount of USD 85,000.

27. As a result of the difference between the above-mentioned amounts, the members of the Chamber highlighted that the amount due by the Respondent as compensation corresponds to approximately USD 400,000.

28. In conclusion, for all the above reasons, the Chamber decided to partially accept the Claimant’s request and that the Respondent must pay to the Claimant the amount of USD 400,000 as compensation for breach of contract without just cause, which is considered by the Chamber to be a reasonable and justified amount as compensation.

29. In addition, taking into account the Claimant’s request, the Chamber decided that the Respondent must pay to the Claimant interest of 5% p.a. on the amount of compensation as of the date on which the claim was lodged, i.e. 27 February 2015, until the date of effective payment.

30. Furthermore, the Chamber noted that the Claimant requested the payment for the amount of USD 22,727.00 as “Compensation for the ITC refusal” (cf. point I. 8) and as “specificity of sport”, as well as the amount of EUR 570,000, corresponding to “additional compensation”. In this regard, the Chamber unanimously decided to reject said requests due to a lack of legal and contractual basis.

31. The Dispute Resolution Chamber concluded its deliberations in the present matter by establishing that any further claims lodged by the Claimant are rejected.

III. Decision of the Dispute Resolution Chamber

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

2. The Respondent, Club C, has to pay to the Claimant, within 30 days as from the date of notification of this decision, compensation for breach of contract in the amount of USD 400,000, plus 5% interest p.a. as from 27 February 2015.

3. In the event that the aforementioned sum plus interest is not paid within the stated time limit, the present matter shall be submitted, upon request, to the FIFA Disciplinary Committee for consideration and a formal decision.

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

5. The Claimant is directed to inform the Respondent immediately and directly of the account number to which the remittance under point 2. is to be made and to notify the Dispute Resolution Chamber of every payment received.

*****

Note relating to the motivated decision (legal remedy):

According to art. 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 (CAS)

Avenue de Beaumont 2

CH-1012 Lausanne

Switzerland

Tel: +41 21 613 50 00

Fax: +41 21 613 50 01

e-mail: info@tas-cas.org

For the Dispute Resolution Chamber:

Marco Villiger

Deputy Secretary General

Enclosed: CAS directives