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

Wouter Lambrecht (Belgium), 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 16 August 2016, the Player of Country B, Player A (hereinafter: the Claimant), and the Club of Country D, Club C (hereinafter: the Respondent), signed an employment contract (hereinafter: the contract) valid as from 15 August 2016 until 30 June 2017.

2. According to the contract, the Respondent undertook to pay the Claimant, inter alia, the total amount of USD 600,000 as follows:

- USD 200,000 after the Claimant passed the medical examination and the ITC was issued;

- USD 100,000 on 1 January 2017;

- USD 300,000, in 10 monthly instalments of USD 30,000 each, between 1 September 2016 and 30 June 2017.

3. Art. 10.2 of the contract stipulates:

“When the termination of the Contract is not due to a just cause or a mutual agreement between the Parties concerned, the [Club C] or [the Claimant] shall be entitled to receive from other party in breach of the Contract a compensation for a net amount of:

To the [Club C]: All contract net amount ($ 600,000);

To the [the Claimant]: One month salary.”

4. On 12 December 2016, the Respondent gave permission to the Claimant to leave for holidays while stating the following: “[the Respondent] have no objection that you take your vacation during period from 22/12/2016 to 03/01/2017.”.

5. On 21 December 2016, the Respondent terminated the contract with the Claimant without providing any reason.

6. Afterwards, on 22 December 2016 and 23 December 2016, the Claimant sent a letter to the Respondent requesting it to give him immediate permission to leave the country.

7. On 21 February 2017, the Claimant lodged a claim in front of FIFA against the Respondent for breach of contract without just cause, requesting the total amount of USD 340,000, plus 5% interest p.a. starting from 5 January 2017. The amount requested was broken down by the Claimant as follows:

- USD 100,000 corresponding to the payment due on 1 January 2017;

- USD 180,000 corresponding to the monthly salaries as from January 2017 until June 2017;

- USD 60,000 corresponding to “specificity of the sport”;

- Subsidiarily, the Claimant requested the amount of USD 100,000, in case the termination is considered to be with just cause;

- In addition, the Claimant requested the amount of USD 10,000 for legal fees.

8. In particular, the Claimant explained that, following the Respondent’s permission of 12 December 2016, he, together with his wife, wanted to leave Country D to Country B on 22 December 2016, however, according to the Claimant, he was not authorized to leave Country D, due to not having an exit permit by the Respondent to leave the country; this allegedly leaving the Claimant in Country D until 26 December 2016.

9. The Claimant further held that art. 10.2 of the contract is not valid, since said compensation clause is not reciprocal, but unilateral and potestative instead. In consequence, the Claimant argued that the Respondent terminated the contract without just cause and shall be held liable to pay compensation.

10. In its reply to the claim, the Respondent underlined to have lawfully terminated the contract on the basis of art. 10.2 of the contract.

11. In this regard, the Respondent argued that both parties agreed on the relevant clause and that it complied with the agreed terms. The Respondent pointed out that the Claimant did not refuse to sign the contract including said provision and that the clause would be applicable.

12. Regarding the Claimant’s argument that he was not allowed to leave Country D, the Respondent explained that he wanted to leave the country without permission and that said permission was granted shortly after on the first working day after the weekend. In this regard, the Respondent held not having “blocked the Claimant to travel”.

13. Subsequently, the Respondent stressed that it fulfilled all its financial obligations towards the Claimant as from the moment of the signature of the contract.

Finally, the Respondent held that in accordance with art.10.2 of the contract, USD 30,000 is the amount it should pay to the Claimant as compensation for breach of contract.

15. In his replica, the Claimant points out in relation to art.10.2, that said article is abusive, as amongst other things it states, that in case the Respondent terminated the contract, it would have to pay USD 30,000 only, whereas in case the Claimant terminated the contract, he would have to pay USD 600,000, namely 20 times more than the Respondent.

16. Furthermore, the Claimant stressed that contrary to what the Respondent argued, he was not granted exit from Country D on the date of termination of the contract, and that it was until the 26 December 2016 that he could leave.

17. Moreover, regarding payments done by the Respondent, the Claimant stated that the payment of USD 200,000, which was due at the time of passing the medical exam in 2016, was made late, which suggests not correct compliance by the Respondent of its obligations.

18. In its final comments, the Respondent reiterated the arguments of its reply.

19. On 2 February 2017, the Claimant signed an employment contract with the Club of Country B, Club E, valid as from date of signature until 31 December 2017, according to which the Claimant was entitled to receive a monthly salary of 35,490.

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 21 February 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 and par. 2 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 an 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 March 2018 by means of which the parties were informed of the composition of the Chamber, the member Alexandra Gómez and the member Joel Talavera refrained from participating in the deliberations in the case at hand, due to the fact that the member Alexandra Gómez has the same nationality as the Claimant and that, in order to comply with the prerequisite of equal representation of club and player representatives, also the member Joel Talavera refrained from participating. Thus, the Dispute Resolution Chamber adjudicated the case in presence of three members in accordance with art. 24 par. 2 of the Regulations on the Status and Transfer of Players.

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 2018), and considering that the present claim was lodged on 21 February 2017, 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, on 16 August 2016, the parties had signed an employment contract valid as from 15 August 2016 until 30 June 2017.

7. In continuation, the members of the Chamber noted that the Claimant lodged a claim against the Respondent maintaining that the latter had terminated the employment contract without just cause on 21 December 2016 by means of a letter to the Claimant, letter which does not invoke a reason for the unilateral termination and only makes reference to art 10.2 of the contract.

8. Moreover, the Chamber took note that the Claimant received all outstanding receivables up to the termination. In this regard, the Claimant asks to be awarded compensation for breach of the employment contract since according to him, art. 10.2 of the contract shall be deemed invalid. In this regard, the Claimant further pointed out that said article is unilateral and potestative and therefore cannot be taken into account. As a result, the members of the Chamber observed that the Claimant helds that the Respondent terminated the contract without just cause.

9. The DRC further noted that the Respondent, for its part, argued in its answer having acted in accordance with art. 10.2 of the contract, agreed upon by both parties, and therefore did not violate the contract. Furthermore, the DRC observed that the Respondent sustained that it only has to pay the amount of USD 30,000, as agreed under art.10.2 of the contract as compensation for breach of contract.

10. Having said this, the DRC acknowledged that the central issue in the matter at stake was to determine as to whether the contract was terminated by the Respondent with or without just cause and to decide on the consequences thereof.

11. In doing so, the DRC recalled that it has remained undisputed that the Respondent terminated the contract on 21 December 2016 without invoking any reason whatsoever.

12. What is more, the Chamber recalled that art. 10.2 of the contract only refers to the consequences of a termination, and not to its reasoning.

13. In view of the above and in consideration that the Respondent had not presented any reasons to justify such termination in its reply to the claim, the Chamber decided that the Respondent had no just cause to unilaterally terminate the employment relationship between the parties on 21 December 2016. Consequently, the Respondent is to be held liable for the early termination of the employment contract without just cause.

14. Subsequently, prior to establishing the consequences of the termination of the employment contract with just cause by the Claimant in accordance with art. 17 par. 1 of the Regulations, the Chamber held that it, in general, had to address the issue of unpaid remuneration at the moment when the contract was terminated by the Claimant.

15. Bearing in mind that no remuneration remained unpaid up to the termination, the Chamber turned its attention to the consequences of such termination of the employment contract by the Respondent without just cause on 21 December 2016.

16. Taking into consideration art. 17 par. 1 of the Regulations, the Chamber decided that the Claimant is entitled to receive compensation for breach of contract from the Respondent.

17. In continuation, the Chamber focused its attention on the calculation of the amount of compensation for breach of contract 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 of all had to clarify as to whether the pertinent contract contains 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 according to art. 10.2 of the contract:

“When the termination of the Contract is not due to a just cause or a mutual agreement between the Parties concerned, the [Club C] or the [the Claimant] shall be entitled to receive from other party in breach of the Contract a compensation for a net amount of:

- To the [Club C]: All contract net amount ($ 600,000);

- To [the Claimant]: One month salary.”

19. After a thorough analysis of the above-mentioned clause, the DRC considered that said clause is in direct opposition with the general legal principle of proportionality and the principle of balance of rights of the parties since it provides benefits towards the Respondent with no equivalent right in favour of the Claimant. In this respect, the Chamber underlined that in case the Claimant would have terminated the contract during the period of validity of the contract, he would have had to pay USD 600,000 as per art. 10.2 of the contract.

20. On account of the above, the members of the Chamber concluded that art. 10.2 of the contract is to be deemed invalid and therefore, inapplicable.

21. 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.

22. The members of the Chamber then turned their attention to the remuneration and other benefits due to the Claimant under the existing contract and/or the new contract, 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 the new contract, if any, in the calculation of the amount of compensation.

23. 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 the date of termination without just cause by the Claimant until 30 June 2017, bearing in mind that he would have received in total USD 280,000 as remuneration for the period as from 1 January 2018 until 30 June 2017. Consequently, the Chamber concluded that the amount of USD 280,000 serves as the basis for the final determination of the amount of compensation for breach of contract in the case at hand.

24. 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.

25. In this respect, the Chamber recalled that the Claimant had found new employment with the Club of Country B, Club E, as from 2 February 2017 until 31 December 2017. In accordance with the employment contract signed between the Claimant and Club E, the Claimant was entitled to a monthly salary of 35,490, corresponding to approximately USD 1,245 and therefore received the total amount of USD 6,225 until 30 June 2017.

26. Consequently, on account of the above-mentioned considerations and the specificities of the case at hand as well as the Claimant’s general obligation to mitigate his damage, the Chamber decided to partially accept the Claimant’s claim and that the Respondent must pay the amount of USD 273,775 as compensation for breach of contract to the Claimant.

27. 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 of the claim, i.e. 21 February 2017, until the date of effective payment.

28. In addition, the claim regarding additional compensation is rejected, due to absence of a contractual basis.

29. Furthermore, as regards the claimed legal fees, the Chamber referred to art. 18 par. 4 of the Procedural Rules as well as to its long-standing and well-established jurisprudence, in accordance with which no procedural compensation shall be awarded in proceedings in front of the Dispute Resolution Chamber. Consequently, the Chamber decided to reject the Claimant’s request relating to legal fees.

30. The members of the Chamber concluded their deliberations by rejecting any further claim of the Claimant.

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 273,775 plus 5% interest p.a. as of 21 February 2017 until the date of effective payment.

3. In the event that the aforementioned amount plus interest is not paid by the Respondent within the stated time limit, the present matter shall be submitted, upon request, to FIFA’s 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 article 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:

Emilio García Silvero

Chief Legal & Integrity Officer

Encl: CAS directives