F.I.F.A. – Dispute Resolution Chamber / Camera di Risoluzione delle Controversie – labour disputes / controversie di lavoro (2017-2018) – fifa.com – atto non ufficiale – Decision 29 March 2018

Decision of the

Dispute Resolution Chamber

passed in Zurich, Switzerland, on 29 March 2018,

in the following composition:

Thomas Grimm (Switzerland), Deputy Chairman

Roy Vermeer (The Netherlands), member

Alexandra Gómez (Uruguay), member

Wouter Lambrecht (Belgium), member

Joel Talavera (Paraguay), 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

between the parties

I. Facts of the case

1. On 4 July 2016, the agent of the player of Country B, Player A (hereinafter: the player or Claimant) received a letter from the club of Country D, Club C (hereinafter: the club or Respondent), with a proposal for the player to join the club for the 2016-2017 season, for a yearly salary of USD 200,000. According to the information contained in the Transfer Matching System (TMS), the 2016/2017 season in Country D started on 27 July 2016 and ended on 24 May 2017.

2. After having received the club’s proposal, the player, allegedly in the period between 4 and 11 July 2016, terminated his contract with the club of Country B, Club E, and flew to Country D on 12 July 2016, in order to conclude the negotiations with the club.

3. After having passed a medical examination in Country D on 14 July 2016, on 16 July 2016, the player and the club concluded an employment agreement (hereinafter: the contract), valid for the season 2016-2017.

4. According to article 4.1 of the contract, the player was entitled to receive a total salary of USD 200,000, corresponding to 6,017,900,000 in the currency of Country D, to be paid as follows:

 30% of 6,017,900,000 in the currency of Country D as first payment ‘one week before starting the first game’;

 20% of 6,017,900,000 in the currency of Country D as second payment ‘in half season time’;

 30% of 6,017,900,000 in the currency of Country D as ‘low to be paid in 10 instalments during the tournament’;

 20% of 6,017,900,000 in the currency of Country D as third payment ‘before last game of season’.

5. Moreover, according to the articles 4.1.2 and 4.1.3 of the contract, the player is entitled to receive ‘bonus apartment furnishing’ as well as ‘bonus tree round – trip ticket per year’.

6. On 1 March 2017, the player lodged a claim against the club in front of FIFA, requesting that the club be ordered to pay him the total amount of USD 207,600 as compensation for breach of contract, specified as follows:

 USD 200,000 as value of the contract in the 2016-2017 season;

 USD 5,700 as costs related to three round-trip tickets;

 USD 1,900 as costs related to the reimbursement of the costs of an air ticket for the player’s agent to travel back to Country B;

Furthermore, the player requested the amount of 55,000 in the currency of Country B to be paid by the club, as ‘the lost amounts with Club E’, specified as follows:

 50,000 in the currency of Country B as salaries from July until November 2016;

 5,000 in the currency of Country B as ‘bonus established in the contract with Club E’.

Finally, the player requested 1% interest per month on the amounts of USD 207.600 and 55,000 in the currency of Country B as from August 2016 until the date of effective payment.

7. In his claim, the player explains that after the signing of the contract on 16 July 2016, he was presented to the media by the club and the signing of the contract was published on the club’s website. Also, the player argues that he started training with the team on 16 July 2016.

8. Furthermore, the player explains that ‘just a few days after the contract conclusion’, the club informed him that ‘his services were no longer needed’, and that he ‘was dismissed from the team’. Moreover, the player states that the club refused to pay any values to him related to the contract, and did not even pay for his air tickets back to Country B.

9. In addition, the player explains that on 24 October 2016, he put the club in default, providing a 15 days’ deadline to pay the amount of USD 207,600, however to no avail.

10. In spite of being invited to do so, the club did not reply to the claim of the player.

11. After being requested to do so, the player informed FIFA that on 4 November 2016, he signed an employment contract with the club of Country B, Club F, valid as from 1 December 2016 until 31 December 2017, and provided a copy of said contract. Based on this document, the player is entitled to receive a monthly salary of 9,500 in the currency of Country B (approximately USD 2,971 or 108,503,000 in the currency of Country D) for the month of December 2016, and a monthly salary of 13,000 in the currency of Country B (approximately USD 4,065 or 148,478,000 in the currency of Country D) for the period between 1 January and 31 December 2017. For the period between 1 December 2016 and 24 May 2017, this amounts to approximately 71,565 in the currency of Country B (approximately USD 22,382 or 817,374,000 in the currency of Country D).

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 1 March 2017. Consequently, the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (edition 2017; 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 in combination with art. 22 lit. b of the Regulations on the Status and Transfer of Players (editions 2016 and 2018) 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. 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 (editions 2016 and 2018), and considering that the present claim was lodged on 1 March 2017, the 2016 edition of said regulations (hereinafter: 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 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.

5. In this respect, the Chamber recalled that on 16 July 2016, the parties had signed an employment contract, valid for the 2016/2017 season, on the basis of which the player was entitled to receive inter alia a total salary of USD 200,000 or 6,017,900,000 in the currency of Country D, payable in 4 different instalments, in currency of Country D. In addition, the player was also entitled to receive housing allowances as well as return flight tickets from Country D to Country B.

6. In continuation, the members of the Chamber noted that the player lodged a claim against the club, maintaining that the club, ‘a couple of days’ after the signing of the contract on 16 July 2016, had unilaterally terminated the employment contract without just cause, alleging it no longer needed the services of the player. After having put the club in default and having asked for being paid the residual value of the contract, however to no avail, the player lodged a claim before FIFA, claiming to be awarded compensation for breach of the employment contract

7. 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. Consequently, the Chamber deemed that the club had renounced to its right of defence and, thus, had accepted the allegations of the player.

8. As a consequence of the aforementioned consideration, the members of the Chamber concurred that, in accordance with art. 9 par. 3 of the Procedural Rules, a decision shall be taken upon the basis of the documents already on file, in other words, upon the statements and documents presented by the player.

9. 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 club in the month of July 2016 with or without just cause, and subsequently, to determine the consequences of the early termination of the contractual relationship by the club, or rather whether the contract had at all been executed by the club.

10. First of all, the Chamber noted that the parties concluded a valid and legally binding employment contract on 16 July 2016, valid for the 2016/2017 season, which circumstances remained uncontested by the club in the context of the current proceedings. However, considering the circumstances described by the player in his claim regarding the termination of the contract by the club in July 2016 just a few days after its signature, as well as the TMS information that the 2016/2017 season in Country D – for which the contract was valid – started on 27 July 2016, it appeared to the members of the Chamber that the parties, in fact, never started the execution of the contract. Furthermore, the player’s allegations, that he took part in training sessions and two friendly matches, were not backed by corroborating documentary evidence and thus, could not be taken into account.

11. Having concluded that the employment contract signed between the player and the club had not been executed at all, the Chamber focused its attention on the reasons brought forward by the club – as per the uncontested claim of the player – to dismiss the player in the month of July 2016, a few days after signing the contract, namely that it was no longer in need of his services.

12. First and foremost, the Chamber noticed that the alleged reason brought forward by the club to dismiss the player do not clearly explain the legal or factual basis of this decision, however only refer to an alleged lack of need of the player’s services, only a couple of day after the conclusion of the contract. Already at this point, the Chamber deemed it vital to outline that a legal action, such as the termination of a contract, needs to have a clear legal basis. Furthermore, only when there are objective criteria which do not reasonably permit to expect the continuation of the employment relationship between the parties, a contract may be terminated prematurely. A premature termination of an employment contract can only ever be an ultima ratio measure.

13. For the sake of completeness of its analysis, the Chamber wished to emphasise that the alleged unsatisfactory performance of a player and/or the lack of need of the player’s services, is a purely unilateral and subjective evaluation made by the club. Said circumstances cannot, by any means, be considered as a valid reason to terminate the contract of a player – namely not to start its execution –, as they are the result of a purely subjective perception, not measurable in objective criteria.

14. On account of all the aforementioned considerations, in particular in view of the considerations under points II./12. and II./13. above, the Chamber established that the club had no valid reasons not to start the execution of the contract undisputedly concluded with the player on 16 July 2016. Consequently, the Chamber concluded that the club had to be held responsible for the legal consequences of said termination.

15. In this respect, the members of the Chamber first deemed it appropriate to establish that no outstanding remuneration is due to the player, since the contract did not start to be executed by the parties, due to the fault of the club, and none of the contractually agreed payments had fallen due at that point in time.

16. Notwithstanding the foregoing, 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 the unjust breach of contract.

17. Having stated the above, the Chamber turned its attention 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.

18. 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. In this regard, the Chamber established that no such compensation clause was included in the employment contract at the basis of the matter at stake.

19. 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.

20. Bearing in mind the foregoing as well as the claim of the player, the Chamber wished to outline that, in accordance with its well-established jurisprudence in this respect, any amount of compensation payable to the player would be due in currency of Country D – and not in USD as per the player’s claim –, as the parties had agreed in the contract upon the payment of the player’s remuneration in several instalments in currency of Country D.

21. Subsequently, the members of the Chamber proceeded with the calculation of the monies payable to the player under the terms of the employment contract as from 16 July 2016 until the end of the 2016/2017 season, and noted that in said period of time, the player was entitled to 4 instalments, in total amounting to 6,017,900,000 in the currency of Country D. In this respect, the Chamber established that, in the absence of any monetary value in the contractual conditions relating to the housing allowance, said benefit shall be not be taken into consideration when calculating the residual value of the contract. Consequently, the Chamber concluded that the amount of 6,017,900,000 in the currency of Country D serves as the basis for the determination of the amount of compensation due to the player for breach of contract.

22. 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.

23. In this context, the Chamber noted that the player had signed a contract with the club of Country B, Club F, where he earned in the period between 1 December 2016 and 24 May 2017 an amount of 71,565 in the currency of Country B, corresponding to approximately 817,374,000 in the currency of Country D. Therefore, the Chamber deemed that the player was able to mitigate his damages with the total amount of 817,374,000 in the currency of Country D in the relevant period and that, as a result, the amount of 5,200,526,000 in the currency of Country D should be considered for the calculation of compensation.

24. The Chamber also considered important to point out that, although the employment contract was fully valid and enforceable, the execution of the contract had never started. In this respect, the members of the Chamber deemed that such circumstance should be taken into consideration in the calculation of the amount of compensation for breach of contract, and decided – in accordance with its well-established jurisprudence – to reduce the aforementioned amount of 5,200,526,000 in the currency of Country D as damages the player suffered, to one third of it, amounting to 1,733,508,666 in the currency of Country D.

25. 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 1,733,508,666 in the currency of Country D to the player, which was to be considered a reasonable and justified amount of compensation for breach of contract in the present matter.

26. Furthermore, taking into account the Chamber’s longstanding jurisprudence and the player’s request, the Chamber ruled that the club must pay 5% interest p.a. on the amount of 1,733,508,666 in the currency of Country D as from 1 March 2017, the date the claim was lodged by the player.

27. Finally, as regards the player’s claim pertaining to air tickets, the Chamber decided that – on the basis of the information provided by FIFA Travel and referring to the relevant terms of the contract – the club must pay to the player the amount of CHF 1,000 for a business class air ticket from Country D to Country B.

28. Additionally, taking into account the Chamber’s longstanding jurisprudence and the player’s request, the Chamber decided that the club has to pay 5% interest p.a. on the amount of CHF 1,000 as from 1 March 2017.

29. Finally, the player’s claim for additional damages in the total amount of 55,000 in the currency of Country B, corresponding to the amount he did not earn with his previous Club E, is rejected due to its lack of legal basis.

30. The Dispute Resolution Chamber concluded its deliberations in the present matter by establishing that any further claim lodged by the player 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, compensation for breach of contract in the amount of 1,733,508,666 in the currency of Country D and of Swiss Francs (CHF) 1,000, plus 5% interest p.a. as from 1 March 2017 until the date of effective payment.

3. In the event that the amounts due to the Claimant in accordance with the above-mentioned number 2. plus interest are not paid by the Respondent 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 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

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