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 15 February 2018

Decision of the

Dispute Resolution Chamber

passed in Zurich, Switzerland, on 15 February 2018,

in the following composition:

Thomas Grimm (Switzerland), Deputy Chairman

Eirik Monsen (Norway), member

Stéphane Burchkalter (France), member

Philippe Diallo (France), member

Joseph Bell (Cameroon), member

on the claim presented by the player,

Player A, Country A

as Claimant

against the club,

Player B, Country B

as Respondent

regarding an employment-related dispute

arisen between the parties

I. Facts of the case

1. In January 2017, the country A player, Player A (hereinafter: the Claimant), and the country B club, Club B (hereinafter: the Respondent), signed an employment contract valid as from 19 January 2017 until 31 May 2018.

2. According to art. 3 of the employment contract, for the second half of the 2016/2017 season the Claimant was entitled to receive, inter alia, EUR 60,000 and a bonus of EUR 25,000 conditioned to the Respondent promoting to the “Super Toto Super League”.

3. According to the same provision, for the 2017/2018 season the Claimant was entitled to receive, inter alia, EUR 116,000 and a bonus of EUR 25,000 conditioned to the Respondent promoting to the “Super Toto Super League” at the end of the season.

4. On 30 June 2017, the Claimant and the Respondent signed a termination agreement, by means of which they terminated the employment contract and agreed that “as of the mutual termination date of 30.06.2017, the non-paid allowances of the [Claimant] for the 2016/2017 Season is the NET total amount of EUR 31.500 – being EUR 27.500 as salary and EUR 4.000 as staying on the league bonus (50% of the 35.000)”.

5. Moreover, pursuant to the termination agreement, the parties agreed that “the total NET amount of EUR 51.500 (EUR 31.500 balance due from 2016/2017 Season and EUR 20.000 – as agreed early termination compensation for the 2017/2018 Season) to be paid as follows:

EUR 7.500 NET on the signing date of this Mutual Termination (10.07.2017), Release and Waiver Agreement.

The Remaining EUR 44.000 NET, being EUR 11.000 NET on 7 August 2017, EUR 11.000 NET on 7 September 2017, EUR 11.000 NET on 7 October 2017 and EUR 11.000 NET on 7 November 2017”.

6. Additionally, according to the termination agreement, “the [Claimant] hereby and unconditionally and irrevocably waives all of his rights in connection with the amount of EUR 121.000 (The amount foreseen for the 2017/2018 Season after deducting EUR 20.000 – agreed early termination compensation) that is payable from the early termination date of 30.6.2017 until 31.5.2018, conditioned down payment, salary, conditional bonus payments, premiums and any kind of allowances arising from the Employment Agreement dated 19.1.2017 and also to claim these amounts before any judicial authorities”.

7. Furthermore, the termination agreement sets forth that “If the remaining part of the NET amount of EUR 44.000, payable in various instalments as stated above, is not paid within 15 days after the respective due dates, than the NET amount of EUR 96.000 will immediately become due as a penalty”.

8. By letter dated 30 August 2017, the Claimant put the Respondent in default of the payment of EUR 96,000, as the instalment which fell due on 7 August 2017 had allegedly remained unpaid for more than 15 days after the deadline.

9. On 5 October 2017 the Claimant lodged a claim against the Respondent in front of FIFA, requesting to be awarded EUR 96,000.

10. More specifically, the Claimant explained that, on 30 August 2017, he had not yet received the instalment due on 7 August 2017. Therefore, according to him, the Respondent’s delay had triggered the provision contained in the termination agreement according to which he was automatically entitled to EUR 96,000 if the Respondent failed to meet the deadline of 15 days after the date on which the payment fell due.

11. Despite having been invited by FIFA to provide its comments on the present matter, the Respondent did not answer to the Claimant’s claim.

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 stake. In this respect, the DRC took note that the present matter was submitted to FIFA on 5 October 2017. Consequently, the DRC concluded that the 2017 edition of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (hereinafter: the Procedural Rules) is 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 DRC is competent to deal with the matter at stake, which concerns an employment–related dispute with an international dimension between a player and a club.

3. Furthermore, the DRC analysed which edition of the Regulations on the Status and Transfer of Players should be applicable as to the substance of the matter. In this respect, the DRC confirmed that in accordance with art. 26 par. 1 and par. 2 of said Regulations (edition 2018) and considering that the present claim was lodged in front of FIFA on 5 October 2017, the 2016 edition of the Regulations on the Status and Transfer of Players (hereinafter: the Regulations) is applicable to the matter at hand as to the substance.

4. The competence of the DRC and the applicable regulations having been established, the members of 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 DRC acknowledged that, following the conclusion of an employment contract in January 2017, the Claimant and the Respondent signed a termination agreement, on 30 June 2017, by means of which they regulated inter alia financial obligations of the Respondent towards the Claimant and which provided for a specific clause to be applied in case the Respondent failed to remit the agreed amount to the Claimant within the relevant deadlines.

6. More specifically, the members of the Chamber observed that, by means of said termination agreement, the Respondent undertook to pay the Claimant the amount of EUR 44,000 by means of 4 instalments of EUR 11,000 each, falling due, respectively, on 7 August 2017, 7 September 2017, 7 October 2017 and 7 November 2017.

7. Equally, the Chamber noted that the termination agreement established that “if the remaining part of the NET amount of EUR 44.000, payable in various instalments as stated above, is not paid within 15 days after the respective due dates, than the NET amount of EUR 96.000 will immediately become due as a penalty”.

8. In continuation, the members of the Chamber noted that, according to the Claimant, the Respondent had failed to pay the instalment due on 7 August 2017 within 15 days from that day, allegedly entitling him to EUR 96,000. In this respect, the DRC deemed worthwhile to point out that the Claimant lodged his claim with the sole aim of redeeming the penalty envisaged in the termination agreement, without filing any request for relief concerning the underlying principal amount of EUR 44,000.

9. Furthermore, the Chamber took note that the Respondent, for its part, failed to present its response to the claim of the Claimant, despite having been invited to do so. In this way, the Chamber deemed, the Respondent renounced its right to defence.

10. Moreover, and as a consequence of the aforementioned consideration, the Chamber established that in accordance with art. 9 par. 3 of the Procedural Rules it shall take a decision upon the basis of the documents already on file.

11. Having said that, the members of the Chamber firstly underlined that it remained uncontested that the first instalment of EUR 11,000, which fell due on 7 August 2017, had not been paid by the Respondent within the 15 day time limit set forth in the termination agreement. Consequently, the DRC agreed with the Claimant’s conclusion that the penalty clause envisaged therein had been triggered.

12. However, after having established the foregoing, the Chamber deemed necessary to focus its attention on the content of the penalty clause.

13. In this respect, the DRC referred to its constant jurisprudence, in accordance with which penalty clauses may be freely entered into by the parties and may be considered acceptable, in the event that the pertinent written clause meets certain criteria, such as proportionality and reasonableness.

14. In relation to the above, the Chamber deemed important to recall that, as a consequence of signing the termination agreement, the Respondent undertook to pay to the Claimant the total amount of EUR 44,000. Therefore, the Chamber emphasised that a penalty clause of EUR 96,000 would represent more than 200% of the total outstanding amount which the parties contractually agreed upon in the context of terminating the employment relationship. The members of the Chamber concluded that a penalty clause of this kind is disproportionate and not reasonable.

15. Consequently, given the imbalance between justice and fairness on the one hand and the liquidated damages on the other that such a penalty clause would determine, the Chamber felt the duty to reduce it to EUR 22,000, i.e. 50% of the principal amount of the settlement agreement.

16. On account of the above considerations as well as the specificities of the matter at hand, the DRC decided that the Respondent is liable to pay a penalty in the amount of EUR 22,000 to the Claimant.

17. The Chamber concluded its deliberations in the present matter 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 B, has to pay to the Claimant the amount of EUR 22,000 as penalty within 30 days as from the date of notification of this decision.

3. In the event that the aforementioned sum 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.

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 (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