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 17 May 2018

Decision of the

Dispute Resolution Chamber

passed in Zurich, Switzerland, on 17 May 2018,

in the following composition:

Geoff Thompson (England), Chairman

John Bramhall (England), member

Stijn Boeykens (Belgium), member

Philippe Diallo (France), member

Jérôme Perlemuter (France), 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 31 August 2017, 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 as from 31 August 2017 until 30 June 2018.

2. According to art. 6 of the contract, the player was inter alia entitled to receive “a monthly salary amounting to EUR 10,000 net”, “supplementary health and social insurance” and “1 round-trip flight ticket for the itinerary Country D-Country B-Country D and a one way ticket for the itinerary Country D-Country B”.

3. Furthermore, the contract contains the following provisions:

“art. 4.2. The player is obliged to:

[…]

b) In case of injuries or illnesses during the professional activity as a licensed player, the player should immediately inform the assigned doctor of the Club. […] If the player loses his ability to player for more than 2 (two) days, or he claims that he is no available to play, in collaboration with the club’s doctor, should provide the necessary documentation regarding his injury to the first coach and club’s director.

[…]

art. 5.5. The player is required to submit to the administration of the club all the medical documentation regarding health assessment conducted in case of illnesses of accidents concerned, no later than two (2) days of suffering these illnesses or accidents.

[…]

art. 5.7. If the player suffers physical injuries out of the time of providing official sporting services in the club’s favour […] he will receive 40% (forty percent) of the monthly salary and of other remuneration, throughout the period of incapacity”.

4. The contract also stipulates in its art. 10 that the club can unilaterally terminate the contract with the player, with prior notice of 15 days, in case of his non-compliance with his obligations with the contract, inter alia, and “the payable penalty will be equal to 1 (one) monthly salary”.

5. In its art. 11, the contract stipulates that the player can unilaterally terminate the contract with the club, with prior notice of 21 days, in case of “serious and persistent breaches” of the employment contract or delay of more than 90 days to pay any amounts therein established. In case the club manages to fulfil its obligations “within the notice period of 15 days […] the player cannot terminate the contract unilaterally with just cause”.

6. On 2 January 2018, the player put the club in default of payment of his salaries for September, October, November and December 2017, for a total of EUR 40,000, urging the club to pay the aforementioned amount within 21 days following receipt of such default notice.

7. On 16 January 2018, the player and the club concluded an “Agreement for the mutual termination of the employment relationship” (hereinafter: the termination agreement).

8. According to art. 2 par. 1 of the termination agreement, the club is obliged to pay to the player the total amount of EUR 50,000, corresponding to outstanding salaries for the period between September and December 2017 (EUR 40,000) and to compensation for the premature termination of the contract (EUR 10,000).

9. In art. 2 par. 2 of the termination agreement, the parties stipulated that the aforementioned amount must be paid “within 3 days of singing this agreement”.

10. Pursuant to art. 2 par. 3 of the termination agreement, the latter shall be considered to be null and void, should the club not fulfil its obligation according to art. 2 par. 1 and 2. “Therefore, the parties will return to the same contractual circumstances, as this agreement has never been concluded”.

11. Finally, art. 2 par. 4 of the agreement stipulated that “by signing this agreement and by the fulfilment of the obligations stipulated in this article by the club, the parties will consider to have mutually and prematurely terminated the employment contract with each other. Therefore, no sporting services will be required by the club from the player”.

12. On 25 January 2018, the player put the club in default, claiming it had not paid him any amounts from the termination agreement. The player urged the club to pay the amount of EUR 40,000 as overdue remuneration for September to December 2017 in the following 4 days. In case of non-payment, the player would “proceed with the termination of the contract with just cause”, submit the case to FIFA and be “entitled for compensation till the end of the fixed period of which the contract was negotiated”.

13. On 6 February 2018, the player terminated the contract in writing, claiming no payment had been received after the default notice of 25 January 2018.

14. On 7 February 2018, the player lodged a claim against the club in front of FIFA, requesting that the club has to be ordered to pay the following amounts:

Outstanding remuneration in the amount of EUR 40,000

- The monthly salaries for September to December 2017, in the amount of EUR 10,000 each, plus 5% interest p.a. “as of the date of effective payment as overdue payables”;

Compensation for breach of contract in the amount of EUR 60,000

- EUR 60,000 as residual value of the contract in the period between January and June 2018, corresponding to six monthly payments of EUR 10,000 each.

15. In his claim, the player states that “no monthly remuneration has been paid for the duration of the contract towards the Player.” After having put the club in default on 2 January 2018, the parties concluded the termination agreement, which was also not respected by the club. Thus, the player claims to be entitled to claim outstanding salaries and compensation as per the original employment contract.

16. In its reply to the player’s claim, the club does not contest the outstanding salaries owed to the player.

17. According to the club, however, from the beginning of the contract, the performance of the player was not at the expected level. The player was in a “poor medical condition” and only played 124 minutes during his entire stay at the club.

18. Furthermore, due to alleged medical issues, the player requested “on several occasions” to be treated outside of Country D.

19. As per the club, “taking into account the aforementioned fact, i.e. the constant departure of the claimant outside Country D for medical treatment, the respondent did not pay to him the monthly salaries, based upon the argument that the claimant had not provided any services during the employment relationship”.

20. The club also does not contest its non-compliance with the termination agreement, however, it disputes the validity of its art. 2 par. 3 (cf. point I.9 above) for the following reasons:

- “it contradicts the willingness of the parties”, which according to the club was to terminate their employment relationship;

- “the failure to respect a financial obligation cannot trigger the re-instauration of an employment relationship”;

- “the failure to respect a financial obligation can solely produce financial consequences”, but not “re-create a binding contractual relationship, which is a complete contrast to the primary intent of the parties”.

21. Therefore, the club concludes that “the employment relationship had been previously terminated upon mutual agreement and no consequent termination could had been pronounced by the Claimant. Therefore, the Claimant is only entitled to receive the payment of the amount of EUR 50,000.00, and no other compensation.”

22. Should art. 3 par. 2 of the termination agreement be considered as valid, the club claims that “on 20 January 2018, the employment relationship between the parties would have resumed” and “as of this date, the claimant should had been performing services in favour of the respondent”. Not only did the player fail to return to the club, but he terminated the contract on 6 February 2018 (cf. point I.12 above), i.e. during the course of the season in Country D and without just cause.

23. In conclusion, the club states that it is willing to pay the player the amount of EUR 50,000 as per the termination agreement, but requests FIFA to reject his claim for compensation in the amount of EUR 60,000.

24. Upon request, the player informed FIFA that on 17 January 2018, he returned to his club of origin, Club E, with which he had a contract valid from 17 January 2018 to 30 June 2019, and according to which he was entitled to receive the following amounts: monthly basic salary in the amount of EUR 4,000 from 1 February 2018 to 30 June 2018.

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 7 February 2018. Consequently, the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (edition 2018; 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 (edition 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 (edition 2018), and considering that the present claim was lodged on 7 February 2018, the January 2018 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 the parties had signed an employment contract, valid as from 31 August 2017 until 30 June 2018, on the basis of which the player was entitled to receive the amount of EUR 100,000, consisting of ten monthly instalments of EUR 10,000.

6. In continuation, the members of the Chamber noted that on 16 January 2018, the parties agreed on a termination agreement. The Chamber took into account that after the Respondent failed to make the agreed payment, the Claimant put the Respondent in default on 25 January 2018 and, in the absence of any payment and bearing in mind art. 2 par. 3 of the termination agreement, he terminated the employment contract unilaterally on 6 February 2018.

7. In this context, the DRC highlighted that the central issues in the matter at stake would be to determine whether the employment contract was terminated by the termination agreement of 16 January 2018 or unilaterally by the Claimant on 6 February 2018 and, should the Chamber come to the conclusion that the employment contract was terminated unilaterally, whether the Claimant had just cause to do so.

8. In this respect, the Chamber wished to emphasize that, according to the Claimant, the Respondent failed to make the agreed payment according to the termination agreement, resulting in the nullity of the latter pursuant to art. 2 par. 3 of said agreement. The DRC also took due note of the Claimant’s allegation that the Respondent failed to pay any salary since the beginning of the employment contract. Considering the failure of the Respondent to pay his remuneration as per both the employment contract and the termination agreement, in spite of the player’s default notices of 2 and 25 January 2018, the player deemed to have had a just cause to terminate the re-established employment contract on 6 February 2018.

9. The Chamber then turned its attention to the arguments of the Respondent and acknowledged that the latter – whilst confirming its failure to pay the player as per the employment contract and the termination agreement – considers that the employment contract was terminated by mutual agreement in a definitive manner on 16 January 2018, as it was the parties will to end the contractual relationship, in spite of art. 3 par. 2 of the termination agreement. Therefore, the Respondent deemed that the Claimant is only entitled to the agreed compensation in the amount of EUR 50,000, as per the termination agreement. The Chamber also took note of the Respondent’s allegations, that the Claimant’s performance was not at the expected level and that he was in a poor medical condition. Furthermore, the Respondent argued that should the Chamber come to the conclusion that art. 3 par. 2 of the termination agreement is valid and that the validity of the employment contract was consequently re-established, then the Claimant had no just cause to terminate the contract on 6 February 2018, as he failed to return to the club and resume his activities with it for more than 16 days.

10. Bearing in mind the arguments put forth by the Claimant and the Respondent, as well as the contents of the employment contract and the termination agreement, the DRC deemed that the clause stipulated in art. 2 par. 3 is to be considered as valid as it was agreed by both parties, reflects the consequences of the failure to solve the matter amicably and does not contradict the FIFA Regulations. Thus, by the failure of the Respondent to pay the amounts therein established, the employment contract became valid again between the parties on 20 January 2018 and subsequently terminated unilaterally by the Claimant on 6 February 2018.

11. Having established, that the contract was terminated unilaterally by the Claimant on 6 February 2018, the Chamber proceeded to determine whether the contract was terminated with just cause by the Claimant. In this respect, the Chamber acknowledged that the Claimant had not received any salary during his employment with the club, which is also undisputed by the Respondent. The Chamber further acknowledged that the Claimant put the Respondent in default on 2 January 2018, i.e. after the Respondent failed to pay his salaries for September to December 2017 on the due dates and, in particular his salary of September 2017 for more than 90 days, and informing the Respondent that if it failed to pay the outstanding salaries within the following 21 days, the Claimant would reserve his right to terminate the contract. The Chamber also noted, that despite the Respondent’s argument that the Claimant did not return to the club between 20 January 2018 and 6 February 2018, the Respondent also never requested the Claimant’s return.

12. On account of the above and taking into consideration the Chamber’s longstanding jurisprudence in this respect, the Chamber decided that the Claimant had just cause to unilaterally terminate the contract on 6 February 2018 and that the Respondent is to be held liable for the early termination of the contract with just cause by the player. In particular, the Chamber considered that the player’s absence at the club for approximately 16 days, after the reinstatement of the employment contract, was not sufficient to deprive the Claimant of a just cause, bearing in mind that he was undisputedly not paid by the club without a valid reason from the beginning of the contract, that he put the club in default on 2 January 2017, complying with the termination procedure stipulated in art. 11 of the contract, and that the termination agreement was also not respected by the Respondent, in spite of the player’s reminder of 25 January 2018. As a consequence, the Chamber concluded that the player could reasonably expect that the Respondent would not comply in the future with the contractual obligations it had been ignoring from the start of their relationship.

13. 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 on 6 February 2018, the Chamber focused its attention on the consequences of such termination.

14. 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 50,000, consisting of the salaries for the months of September, October, November and December 2017 and January 2018, à EUR 10,000 each.

15. 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 p.a. on the amount of EUR 50,000 as from the date of claim, i.e. 7 February 2018.

16. 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.

17. 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.

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, as art. 10 of the contract only refers to the unilateral termination of the contract by the club.

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, the Chamber proceeded with the calculation of the monies payable to the player under the terms of the employment contract as from its date of termination with just cause by the Claimant, i.e. 6 February 2018, until 30 June 2018, and concluded that the Claimant would have received in total EUR 50,000 as remuneration had the contract been executed until its expiry date. Consequently, the Chamber concluded that the amount of EUR 50,000 serves as the basis for the final determination of the amount of compensation for breach of contract in the case at hand.

21. 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.

22. Indeed, in February 2018, the player found employment with the club of Country F, Club E. In accordance with the pertinent employment contract, which has been made available by the player, the player was entitled to receive a monthly salary of EUR 4,000. Consequently, the Chamber established that the value of the new employment contract concluded between the player and Club E for the period as from 7 February 2018 until 30 June 2018 amounted to EUR 20,000.

23. 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 30,000 to the player, which was to be considered a reasonable and justified amount of compensation for breach of contract in the present matter.

24. The Dispute Resolution Chamber concluded its deliberations in the present matter by establishing that the Claimant’s claim is partially accepted and 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, outstanding remuneration in the amount of EUR 50,000, plus 5% interest p.a. as from 7 February 2018 until the date of effective payment.

3. In the event that the amount due to the Claimant in accordance with the above-mentioned number 2. is 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. 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 in the amount of EUR 30,000.

5. In the event that the amount due to the Claimant in accordance with the above-mentioned number 4. is not paid by the Respondent 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 is rejected.

7. 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 (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:

Omar Ongaro

Football Regulatory Director

Encl. CAS directives