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 2 March 2017

Decision of the

Dispute Resolution Chamber

passed in Zurich, Switzerland, on 2 March 2017,

in the following composition:

Geoff Thompson (England), Chairman

Mario Gallavotti (Italy), member

Jon Newman (USA), member

on the matter between the player,

Player A, Country B

as Claimant / Counter-Respondent

and the club,

Club C, Country D

as Respondent / Counter-Claimant

regarding an employment-related dispute

between the parties

I. Facts of the case

1. On 1 February 2016, the Player of Country B, Player A (hereinafter: the player or Claimant) and the Club of Country D, Club C (hereinafter: the club or Respondent) concluded an employment agreement (hereinafter: the contract), valid from 1 February 2016 until 31 May 2017.

2. According to the contract, the player was entitled to receive the total amount of EUR 375,000, payable as follows:

 an instalment of EUR 65,000, of which EUR 30,000 was payable in cash ‘on the date of signature’ and EUR 35,000 ‘by cheque on execution date, due date: 15 February 2016’;

 16 monthly payments of EUR 13,125, due on the 28th day of each month, starting on 28 February 2016 and ending on 28 May 2017;

 an instalment of EUR 50,000, due on 2 July 2016;

 an instalment of EUR 50,000, due on 30 July 2016.

3. Article 11 of the special provisions of the contract stipulates the following: ‘Player shall be entitled to unilaterally terminate the contract should salary thereof is not paid in 45 days period’.

4. Furthermore, article 12 of the contract holds the following: ‘Player shall be entitled to unilaterally terminate the contract by depositing EUR 250,000 to the club account between 1 June 2016 and 1 July 2016’.

5. In addition, article 13 of the contract contains the following clause: ‘In case Club fails to make advance payment of EUR 30,000 to the player by 3 February 2016, then Player shall be entitled to terminate the Contract, unilaterally, without being subject to 30-days notice’.

6. On 28 July 2016, the player lodged a claim against the club in front of FIFA, requesting that the club has to be ordered to pay him the total amount of EUR 388,750, specified as follows:

 EUR 52,500 as outstanding receivables, related to the unpaid salaries for the months of February, March, April and May 2016 in the amount of EUR 13,125 each, plus ‘legal interest’;

 EUR 257,500 as compensation for breach of contract, as residual value of the contract in the period between 13 June 2016 and 31 May 2017, i.e. 12 salary payments of EUR 13,125 each, as well as two instalments of EUR 50,000 each;

 EUR 78,750 as ‘additional compensation’.

Furthermore, the player requested for the reimbursement of his legal costs as well as procedural costs to be paid by the club.

7. According to the player, the club failed to pay him the monthly salaries as from the beginning of the contract. The player argued to have put the club in default on 13 April 2016, 23 April 2016, 10 May 2016 and 1 June 2016, asking for the payment of the outstanding salaries, however to no avail.

8. Subsequently, on 13 June 2016, the player unilaterally terminated the contract, with explicit reference to article 11 of the contract, due outstanding salaries in the amount of EUR 52,500, related to the salaries of the months February, March, April and May 2016.

9. Despite having been invited to present its response to the claim lodged by the player until Wednesday 7 September 2016, the club only requested a deadline extension for submitting its reply to the player’s claim on Thursday 8 September 2016.

10. After being informed by the FIFA administration that the request for a deadline extension was received after the expiry of the deadline and that the investigation phase of the matter at hand was therefore closed, on 17 September 2016, the club submitted its response to the claim of the player.

11. In its response, the club held that it ‘only fully benefited the player for 3 League Matches’, that the player ‘refuse to participate in the trainings until his salaries are paid’ and that it never ‘receive any of the notifications’. Further, the club holds that the player signed a new contract with the Club of Country B, Club E and that as a result thereof, the player cannot be awarded the total compensation of EUR 257,500 as claimed.

12. Furthermore, the club requested FIFA to ‘give appropriate amount of time to the claimant to present the necessary fax confirmations’ and ‘to ask the claimant for his new contract with Club E’. In addition, the club requests the DRC to render a decision, stating that the player terminated the contract without just cause, as well as to ‘determine a compensation due to the damages of the club’.

13. After being requested to clarify its request for compensation, the club did not submit further correspondences.

14. Finally, the player informed FIFA that during the season 2016/2017 he was ‘training and playing’ with the Club of Country B, Club E, however that he was playing ‘in amateurstatus at without any compensation’.

II. Considerations of the Dispute Resolution Chamber

1. First of all, the Dispute Resolution Chamber (hereinafter also referred to as Chamber or DRC) analysed whether it was competent to deal with the matter at hand. In this respect, it took note that the present matter was submitted to FIFA on 28 July 2016. Consequently, the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (edition 2015; hereinafter: Procedural Rules) are applicable to the matter at hand (cf. art. 21 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 and 2 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 of Country B and a Club of Country D.

3. In this respect, the Chamber was eager to emphasize that contrary to the information contained in FIFA’s letter dated 23 February 2017 by means of which the parties were informed of the composition of the Chamber, the member, Member F, and the member, Member G, refrained from participating in the deliberations in the case at hand, due to the fact that Member F has the same nationality as the player and that, in order to comply with the prerequisite of equal representation of club and player representatives, also Member G refrained from participating and thus the Dispute Resolution Chamber adjudicated the case in presence of three members in accordance with art. 24 par. 2 of the Regulations.

4. Furthermore, the Chamber analysed which regulations 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 (edition 2016), and considering that the present claim was lodged on 28 July 2016, the 2016 edition of said regulations (hereinafter: Regulations) is applicable to the matter at hand as to the substance.

5. The competence of the Chamber and the applicable regulations having been established, the Chamber entered into the substance of the matter. In this respect, the Chamber started by acknowledging all the above-mentioned facts as well as the arguments and the documentation submitted by the parties. However, the Chamber emphasised that in the following considerations it will refer only to the facts, arguments and documentary evidence, which it considered pertinent for the assessment of the matter at hand.

6. In this respect, the Chamber recalled that the parties had signed an employment contract, valid as from 1 February 2016 until 31 May 2017, on the basis of which the player was entitled to receive the amount of EUR 375,000.

7. In continuation, the members of the Chamber noted that the player lodged a claim against the club, maintaining that he had terminated the employment contract with just cause on 13 June 2016, after previously having put the club in default. The player held that the club as from the start of the contract allegedly failed to pay him four monthly salaries, in the amount of EUR 13,125 each. Consequently, the player requested to be awarded with his outstanding dues as well as with the payment of compensation for breach of the employment contract.

8. Subsequently, the DRC observed that the club, in spite of having been invited to do so, had failed to present its reply to the claim of the player, or to timely request an extension of the deadline within the relevant time limit set by FIFA, i.e. 7 September 2016. In fact, the club only requested an extension of the deadline on 8 September 2016. What is more, after the investigation phase in the matter at hand was subsequently closed, the club submitted unsolicited comments and lodged a counterclaim towards the player, claiming compensation for breach of contract to be paid by the player.

9. Based on the foregoing, bearing in mind the Chamber’s constant jurisprudence in this regard and in application of art. 9 par. 3 and art. 16 par. 12 of the Procedural Rules, first of all the Chamber decided that the club’s request for an extension of the deadline was correctly denied by the FIFA Administration, as it was submitted outside the deadline provided to the club and that in the absence of a timely answer of the club, the investigation phase of the matter at hand was closed in accordance with art. 9 par. 3 of the Procedural Rules.

10. What is more, the members of the Chamber recalled art. 9 par. 4 of the Procedural Rules, which provides inter alia for the following: ‘The parties shall not be authorised to supplement or amend their requests or their arguments, to produce new exhibits or to specify further evidence on which they intend to rely, after notification of the closure of the investigation.’ In this respect, the members of the Chamber decided to not take into account the unsolicited comments of the club, including its counterclaim towards the player, which were submitted after the closure of the investigation phase. In the Chamber’s view, any other conclusion would lead to a potential circumvention of the Procedural Rules. As a result, the club’s counterclaim is considered to be inadmissible. In view of the foregoing, the DRC established that it shall take a decision on the basis of those documents on file that were provided prior to the deadline set by FIFA and prior to the subsequent closure of the investigation phase, in casu, on the statements and documents presented by the player.

11. Having established the aforementioned, the Chamber deemed that the underlying issue in this dispute was to determine whether the contract had been terminated by the player on 13 June 2016 with or without just cause, and subsequently, to determine the consequences of the early termination of the contractual relationship by the player.

12. In accordance with the employment contract, and taken into account that the player stated that the club failed to pay him his monthly salaries as from the start of the contract, the club was obliged to pay to the player at the time the contract was terminated, i.e. on 13 June 2016, the monthly salaries for the months February, March, April and May 2016 in the amount of EUR 13,125 each.

13. On account of the aforementioned, in particular in view of the considerations under point II./7., II./8. and II./9. above, the Chamber established that the club, without any valid reason, failed to remit to the player, until 13 June 2016, the date on which the player terminated the contract, the total amount of EUR 52,500. Consequently, and considering that the club had repeatedly and for a significant period of time been in breach of its contractual obligations towards the player, the Chamber decided that the player had just cause to unilaterally terminate the employment contract on 13 June 2016. As a result, the club is to be held liable for the early termination of the employment contact with just cause by the player.

14. In continuation, having established that the club is to be held liable for the early termination of the employment contract with just cause by the player, the Chamber focused its attention on the consequences of such termination.

15. First of all, the members of the Chamber concurred that the club must fulfil its obligations as per the employment contract in accordance with the general legal principle of “pacta sunt servanda”. Consequently, the Chamber decided that the club is liable to pay to the player the remuneration that was outstanding at the time of the termination i.e. the amount of EUR 52,500, consisting of four salaries of EUR 13,125 each, related to the months of February, March, April and May 2016.

16. Furthermore, considering the player’s claim for interest and also taking into account the Chamber’s longstanding jurisprudence, the Chamber ruled that the club must pay 5% interest on the amount of EUR 52,500 as from 28 July 2016.

17. In continuation, the Chamber decided that, taking into consideration art. 17 par. 1 of the Regulations, the player is entitled to receive from the club compensation for breach of contract, in addition to any outstanding salaries on the basis of the relevant employment contract.

18. Having stated the above, the Chamber turned to the calculation of the amount of compensation payable to the player by the club in the case at stake. In doing so, the members of the Chamber firstly recapitulated that, in accordance with art. 17 par. 1 of the Regulations, 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 player 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 first of all, it had to clarify as to whether the pertinent employment contract contained a provision by means of which the parties had beforehand agreed upon an amount of compensation payable by the contractual parties in the event of breach of contract.

20. In this regard, the Chamber reminded that in article 12 of the contract stipulates the following: ‘Player shall be entitled to unilaterally terminate the contract by depositing EUR 250,000 to the club account between 1 June 2016 and 1 July 2016’.

21. While analysing the aforementioned clause, the members of the Chamber noted that said clause only grants the player the right to terminate the contract by paying a predetermined amount to the club, a so-called buy-out clause and therefore cannot be considered as a liquidated damages clause, which provides for an amount of compensation payable by the contractual parties in the event of breach of contract. As such, and in accordance with the longstanding jurisprudence of the DRC in this respect, the Chamber decided that the aforementioned 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 club to the player 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.

23. Bearing in mind the foregoing as well as the claim of the player, the Chamber proceeded with the calculation of the monies payable to the player under the terms of the employment contract until 31 May 2017, taking into account that the player was entitled to receive 12 payments of EUR 13,125 each, as well as two instalments of EUR 50,000 each. Consequently, the Chamber concluded that the amount of EUR 257,500 serves as the basis for the determination of the amount of compensation for breach of contract.

24. In continuation, the Chamber verified as to whether the player 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 player’s general obligation to mitigate his damages.

25. The Chamber further noted that, according to the player´s declaration, he had not been able to sign an employment contract with another professional club during the relevant period of time, however that ‘during the 2016/2017 season’, he was ‘training and playing’ on an amateur basis with the Club of Country B, Club E, ‘without any compensation’. As a result, the Chamber held that no mitigation shall be applied.

26. Consequently, on account of all of the above-mentioned considerations and the specificities of the case at hand, the Chamber decided that the club must pay the amount of EUR 257,500 to the player, which was to be considered a reasonable and justified amount of compensation for breach of contract in the present matter.

27. The Dispute Resolution Chamber concluded its deliberations in the present matter by establishing that any further claim lodged by the player is rejected, as well as that the counterclaim if the club is considered to be inadmissible.

III. Decision of the Dispute Resolution Chamber

1. The claim of the Claimant / Counter-Respondent, Player A, is partially accepted.

2. The Respondent / Counter-Claimant, Club C, has to pay to the Claimant / Counter-Respondent, within 30 days as from the date of notification of this decision, outstanding remuneration in the amount of EUR 52,500, plus 5% interest p.a. as of 28 July 2016.

3. In the event that the amount due to the Claimant / Counter-Respondent in accordance with the above-mentioned number 2. is not paid by the Respondent / Counter-Claimant 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. The Respondent / Counter-Claimant has to pay to the Claimant / Counter-Respondent, within 30 days as from the date of notification of this decision, compensation for breach of contract in the amount of EUR 257,500.

5. In the event that the amount due to the Claimant / Counter-Respondent in accordance with the above-mentioned number 4. is not paid by the Respondent / Counter-Claimant within the stated time limit, interest at the rate of 5% p.a. will fall due as of expiry of the aforementioned time limit and the present matter shall be submitted, upon request, to the FIFA Disciplinary Committee for consideration and a formal decision.

6. Any further claim lodged by the Claimant / Counter- Respondent is rejected.

7. The counterclaim of the Respondent / Counter-Claimant is inadmissible.

8. The Claimant / Counter-Respondent is directed to inform the Respondent / Counter-Claimant immediately and directly of the account number to which the remittances are 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

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 Dispute Resolution Chamber:

Omar Ongaro

Football Regulatory Director

Encl. CAS directives