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 Pavel Pivovarov (Russia), member

Roy Vermeer (Netherlands), member Jon Newman (USA), member

on the claim presented by the player,

Player A, country B,

as Claimant

against the club,

Club C, country D,

as Respondent

regarding an employment-related dispute arisen between the parties

I. Facts of the case

1. On 17 June 2016, the player from country B, Player A (hereinafter: the Claimant) and the club from country D, Club C (hereinafter: the Respondent) concluded an employment contract (hereinafter: the contract), valid as of 1 July 2016 until 31 December 2018. In this regard, art. 1 of the contract specifies, inter alia, that “[t]he contract will be effective only when the [Claimant] has:

- Passed the medical examination by the [Respondent]’s appointed doctor or hospital;

- Summited all necessary health or illness background document (…)”.

2. Pursuant to the contract, the Claimant was entitled to the following remuneration:

- USD 270,000 as annual salary;

- USD 20,000 as sign-on fee payable in two instalments of USD 10,000 in August 2016 and January 2017 respectively;

- USD 1,000 per month as housing allowance;

- One business and two economy roundtrip flight tickets city E – country B or country F per season;

- a car.

3. Furthermore, art. 3 of the contract provides, inter alia, for the following:

“The [Claimant] shall:

(…)

3.4 strictly and fully comply with any laws as well as any and all rules, regulations, conditions statements, instructions and recommendations given by the [Respondent] and/or the [Respondent]’s management/executives

(…)

3.6 submit medical certificates to the [Respondent] upon occurences of injury, illness or any other reasons that will limit or restrict his attendance or participation in any training sessions or matches as designated by the [Respondent], and shall immediately notify the [Respondent] of such facts in writing (or by any other means as the [Respondent] may deem appropriate”.

4. In addition, art. 6 of the contract stipulates that “[i]n case of interruption of the collaboration by the [Respondent] or if the [Respondent] breaches the contract and sacks the [Claimant] in advance within the term of the contract, the [Respondent] must complete a maximum of three month salary as compensation amount to the [Claimant]”.

5. On 30 August 2016, the Respondent terminated the contract based on the Claimant’s failure to submit his medical record and his alleged incapacity to play football. In this regard, the Respondent offered to pay to the Claimant the amount of USD 67,500 as per art. 6 of the contract as well as USD 10,000 corresponding to part of the sign-on fee.

6. On 14 September 2016, the Claimant sent a correspondence to the Respondent, challenging the validity of the termination and requesting compensation.

7. On 12 October 2016, the Claimant lodged a claim in front of FIFA against the Respondent for breach of contract, requesting:

 USD 32,500 as outstanding remuneration as follows:

- USD 22,500 corresponding to his salary for August 2016;

- USD 10,000 corresponding to the first instalment of the sign-on fee;

 USD 687,833.33 as compensation corresponding to the residual value of the contract as follows:

- USD 10,000 as sign-on fee;

- USD 630,000 as salaries;

- USD 28,000 as housing allowances;

- USD 14,000 as car rental;

- USD 5,833.33 as flight tickets.

8. In his claim, the Claimant insists that in accordance with art. 18 par. 4 of the FIFA Regulations on the Status and Transfer of Players, the validity of a contract cannot be made subject to a successful medical examination. In this regard, the Claimant insists that the Respondent should have proceeded to the medical examination prior to signing the contract.

9. In its reply to the claim, the Respondent explains that when arriving in country D on 16 June 2016, the Claimant refused to take a medical examination, informing the Respondent that he was fit and that he would provide it with his medical records before the starting date of the contract. Therefore, the Respondent states that it decided to sign the contract in good faith on 17 June 2016. Nevertheless, and due to the Claimant’s failure to comply with his commitment, the Respondent alleges that it obliged the Claimant to undertake a medical examination which revealed that he “was not physically fit to play as professional football player”. In view of the Claimant’s condition, the Respondent argues that the parties agreed on “on a provisional period” during which the Claimant would follow a tailor-made rehabilitation programme. The Respondent however sustains that the Claimant refused to strictly follow the programme, which is the reason why the second medical examination taken on 25 August 2016 also revealed an incapacity to play professional football. Consequently, considering the Claimant’s bad faith as well as art. 1, 3.4 and 3.6 of the contract, the Respondent asserts that it terminated the contract and offered to pay USD 77,500, amount that the Claimant has never collected.

10. In continuation, the Respondent argues that art. 6 constitutes a valid compensation clause by means of which in accordance with art. 17 par. 1 of the FIFA Regulations on the Status and Transfer of Players, the parties consented that in case of termination with or without just cause, the compensation payable would be limited to three monthly salaries. Furthermore, the Respondent outlines that art. 6 also complies with Labour Protection Act of country D. In this regard, the Respondent points out that in such a situation of bad faith, the Labour Protection Act of country D would have entitled it to terminate without paying any compensation.

11. Notwithstanding the above, and should it disregard art. 6 of the contract, the Respondent requests FIFA to take into consideration the fact that “the recovery of the [Claimant] will take even 2 years or more” and that “the injury happened before the [Claimant] arrived in country D”. Moreover, the Respondent explains that it had to hire a new player in order to compensate the loss of the Claimant. Finally, the Respondent emphasises that the Claimant did not specify how he evaluated the value of the flight tickets, the car rental and the accommodation.

12. In view of the above, the Respondent offered to pay an amount of USD 100,000 broken down as follows:

- USD 67,500 as per art. 6 of the contract;

- USD 10,000 as outstanding sign-on fee;

- USD 22,500 as outstanding salary for August 2016.

13. In his replica, the Claimant alleges that prior to signing the contract, on 17 June 2016, he undertook a medical examination which did not reveal any serious anomaly. Nonetheless, the Claimant acknowledges that he had some discomfort from an injury and informed the Respondent about it. Furthermore, the Claimant maintains that he attended all the medical appointments arranged for him.

14. In continuation, the Claimant reiterates his previous argumentation regarding the breach of art. 18 par. 4 of the FIFA Regulations on the Status and Transfer of Players.

15. As to art. 6 of the contract, the Claimant argues that it must be deemed invalid for lack of reciprocity. Moreover, the Claimant outlines that the clause establishes an amount which cannot be determined in advance and remains at discretion of the Respondent, when it stipulates that the compensation “must compete a maximum of three months salary”. Equally, the Claimant sustains that a maximum amount of compensation equivalent to three monthly salaries is clearly disproportionate, in particular considering the duration of the contract.

16. In its final comments, the Respondent insists that the Claimant “did not have just an injury but rather a very specific injury, namely an ‘Osteitis Pubis’ which makes the case at stake different from all other cases brought to FIFA attention so far”. In this respect, the Respondent outlines that this injury which results from repetitive activities, surely affected the Claimant in the previous years. The Respondent further explains that in order to diagnose such an injury, a doctor needs to be aware of the patient’s medical records. Indeed, the Respondent sustains that if the Claimant had informed the doctor of his medical records as well as the pain he suffered, the latter would have taken more specific tests and diagnosed the injury early enough to treat it. Having said this, the Respondent recalls that according to a medical report issued by the hospital of city E, i.e. an independent hospital, the Claimant’s recovery would take two years or more.

17. In view of the above, the Respondent concludes that the contract should be deemed null and void since it was vitiated by the Claimant’s bad faith.

18. Notwithstanding the above, the Respondent argues that the Claimant tacitly accepted the termination. In particular, the Respondent points out that between 30 August and 14 September 2016, the Claimant: (i) did not participate in the training sessions; (ii) did not object to the termination; (iii) did not meet any of the Respondent’s representative; (iv) did not fulfil any of his contractual obligations.

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 case at hand. In this respect, it took note that the present matter was submitted to FIFA on 12 October 2016. Consequently, the 2015 edition of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (hereinafter: the 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 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. 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 par. 2 of the Regulations on the Status and Transfer of Players (edition 2016), and considering that the present claim was lodged on 12 October 2016, the 2016 edition of said regulations (hereinafter: the Regulations) is applicable to the matter at hand as to the substance.

4. 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 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.

5. The members of the Chamber acknowledged that the parties were contractually bound by means of an employment contract valid as from 1 July 2016 until 31 December 2018.

6. Subsequently, the Chamber took into account that, according to the Claimant, the Respondent had prematurely terminated the contract in writing on 30 August 2016. Equally, the DRC observed that said fact was confirmed by the Respondent.

7. In continuation, the Chamber went on to deliberate whether the facts of the case constituted a just cause for the Respondent to prematurely terminate the employment contract.

8. In this respect, the Chamber took due note of the Respondent’s argumentation that it had terminated the contract with just cause on the basis of art. 1, 3.4 and 3.6 of the contract. In particular, the Chamber remarked that according to the Respondent, the Claimant failed to provide his medical report and was no longer able to provide his services to the club considering his alleged incapacity.

9. On the other hand, the members of the DRC noted that the Claimant points out that the medical examination undertaken prior to signing the contract did not reveal any serious anomaly and argues that, in any case, incapacity is not deemed as a valid ground for termination of a contract.

10. In this context, the Chamber was eager to emphasise that, according to its well-established jurisprudence, and as a general rule, a player’s injury does not constitute a just cause in the sense of art. 14 of the Regulations for a club to terminate a contract. Moreover, the Chamber, referring to the content of art. 18 par. 4 of the Regulations, insisted that once the parties concluded an employment contract, they had the obligation to implement its terms and a club could not unilaterally question the validity of the contract during its course based on the physical state of the player.

11. Furthermore, the Chamber deemed it important to point out that it is the obligation of the Respondent to act with due diligence and perform all the necessary exams to ascertain the health of the Claimant. In this regard, the members of the Chamber outlined that contrary to the Respondent’s allegation, the low number of games played by the Claimant during the previous season should have aroused the Respondent’s suspicion and led the latter to conduct a deeper medical examination prior to the conclusion of the contract.

12. Additionally, the members of the Chamber turned their attention to the argument of the Respondent relating to an alleged “provisional period” agreed upon between the parties. In this regard, the Chamber noted that neither the contract nor any other agreement contains any clause relating to a probation period and, consequently, the Chamber unanimously agreed that this argument of the Respondent must be rejected. In addition, for this reason, the Chamber emphasised that there was no necessity to further analyse the question as to whether such probation period could be considered lawful.

13. On account of all of the above, the members of the Chamber unanimously reached the conclusion that the Respondent terminated the contract without just cause on 30 August 2016.

14. Prior to establishing the consequences of the breach of contract without just cause by the Respondent in accordance with art. 17 par. 1 of the Regulations, the Chamber held that it had to address the issue of any unpaid remuneration at the moment the contract was terminated by the Respondent.

15. In this regard, the Chamber observed that it remains uncontested that the amount of USD 10,000 corresponding to the first instalment of the sign-on fee due in August 2016 was outstanding. Furthermore, the Chamber considered that even though the Claimant’s salary for August 2016 had not formally fallen due on the date of termination, the Claimant had rendered his services to the Respondent for the entire month of August 2016 and therefore decided to award it to the Claimant as outstanding remuneration.

16. Consequently, in accordance with the principle of pacta sunt servanda, the DRC decided that the Respondent is liable to pay the Claimant the amount of USD 32,500 as outstanding remuneration.

17. Having established the above, the Chamber focused its attention on the calculation of the amount of compensation payable to the Claimant by the Respondent 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 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.

18. In application of the relevant provision, the Chamber held that it first 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. The members of the Chamber recalled that in accordance with art. 6 of the contract, “[i]n case of interruption of the collaboration by the club or if the club breaches the contract and sacks the [Claimant] in advance within the term of the contract, the club must complete a maximum of three month salary as compensation amount to the [Claimant]”.

19. In this respect, the members of the Chamber agreed that this clause is to the benefit of the Respondent only, as it does not grant the same rights to the Claimant. In other words, the DRC considered that the relevant clause is in direct opposition with the general principle of proportionality and the principle of balance of rights of the parties since it provides benefits only towards the Respondent with no equivalent right in favour of the Claimant. Indeed, the Chamber outlined that in case the Claimant had been the party in breach, the Respondent would have had the possibility to claim and likely been awarded an amount of compensation much higher than three monthly salaries considering the remaining duration of the contract. Therefore, the Chamber concluded that said clause could not be taken into consideration in the determination of the amount of compensation.

20. 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.

21. In order to estimate the amount of compensation due to the Claimant in the present case, the members of the Chamber first turned their attention to the remuneration and other benefits due to the Claimant under the existing contract and/or any other earnings made within the residual contractual period, which criterion was considered by the Chamber to be essential. The members of the Chamber deemed it important to emphasise that the wording of art. 17 par. 1 of the Regulations allows the Chamber to take into account both the existing contract and any subsequent earnings, if any, in the calculation of the amount of compensation.

22. Bearing in mind the foregoing, the Chamber proceeded with the calculation of the monies payable to the Claimant under the terms of the employment contract until 31 December 2018, taking into account that the Claimant´s remuneration until August 2016 is included in the calculation of the outstanding remuneration. Consequently, the Chamber concluded that the amount of USD 668,000, i.e. remuneration as from September 2016 until December 2018, serves as the basis for the determination of the amount of compensation for breach of contract.

23. 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 player’s general obligation to mitigate his damages.

24. The Chamber noted that it appears from the documentation on file that the Claimant did not sign any contract with a new club within the relevant period.

Thus, the Claimant had apparently not been able to mitigate damages. In this context, the DRC declared that there is no remuneration to be taken into account in order to mitigate the amount of compensation for breach of contract.

25. In this respect and bearing in mind all of the above-mentioned considerations and the specificities of the case at hand, the Chamber decided that the Respondent must pay the amount of USD 668,000 to the Claimant, which was to be considered a reasonable and justified amount of compensation for breach of contract in the present matter.

26. Furthermore, regarding the Claimant’s claim pertaining to flight tickets, referring to the relevant terms of the employment contract (cf. point I.2 above) and the information provided by FIFA Travel, the Chamber decided that the Respondent must pay to the Claimant the amount of USD 2,150 for the Claimant’s return to his home country.

27. The Dispute Resolution Chamber concluded its deliberations in the present matter by establishing that any further request filed by the Claimant is 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, outstanding remuneration in the amount of USD 32,500.

3. The Respondent has to pay to the Claimant, within 30 days as from the date of notification of this decision, compensation for breach of contract amounting to USD 670,150.

4. In the event that the amounts due to the Claimant in accordance with the above-mentioned points 2. and 3. are not paid by the Respondent within the stated time limits, interest at the rate of 5% p.a. will fall due as of expiry of the aforementioned time limits and the present matter shall be submitted, upon request, to the FIFA Disciplinary Committee for consideration and a formal decision.

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

6. The Claimant is directed to inform the Respondent 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