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 25 January 2018

Decision of the

Dispute Resolution Chamber

passed in Zurich, Switzerland, on 25 January 2018,

in the following composition:

Geoff Thompson (England), Chairman

Roy Vermeer (Netherlands), member

Pavel Pivovarov (Russia), 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 18 July 2016, 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 contract (hereinafter: the contract), valid as from 18 July 2016 until 17 July 2018.

2. According to article 4 of the contract, the player is entitled to receive the following amounts:

For the 2016/2017 season:

An annual wage of USD 1,100,000, payable as follows:

 ‘30% of the annual wage’ or USD 330,000, ‘paid in advance after signing the contract’, by no later than 1 August 2016;

 ‘the remaining 70% of the annual wage’ or USD 770,000 in twelve equal instalments of USD 64,166, due at the end of each subsequent month.

For the 2017/2018 season:

An annual wage of USD 1,200,000, payable as follows:

 ‘30% of the annual wage’ or USD 360,000, ‘paid in advance after signing the contract’, by no later than 1 August 2016;

 ‘the remaining 70% of the annual wage’ or USD 840,000 in twelve equal instalments of USD 70,000, due at the end of each subsequent month.

3. Article 6 of the contract contains the following clause: ‘The first party may not delay payment of the second party’s salaries or terminate the contract due to player’s injury during play or training. The second party may terminate the contract only with just cause according to FIFA Regulations. Delay of payment of an aggregate of three (3) monthly wages would be considered a just cause for termination without prior notice’.

4. On 31 August 2017, 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 to the player:

Outstanding remuneration in the amount of USD 558,332, as follows:

 the monthly salaries for May and June 2017, in the amount of USD 64,166 each, plus 5% interest p.a. as of 2 August 2017;

 the monthly salary for July 2017 in the amount of USD 70,000, plus 5% interest p.a. as of 2 August 2017;

 the amount of USD 360,000 as sign-on fee for the 2017/2018 season, as per article 4 of the contract, plus 5% interest p.a. as of 2 August 2016.

Compensation for breach of contract in the amount of USD 840,000, as follows:

 USD 840,000 as residual value of the contract in the period between August 2017 and July 2018, corresponding to twelve monthly payments of USD 70,000 each, plus 5% interest p.a. as of the date of the ‘arbitration decision’.

Finally, the player requested for sporting sanctions to be imposed on the club, as well as that the club be ordered to pay his legal costs.

5. In his claim, the player holds that as from the beginning of the contract, the club was in delay with the payment of his remuneration. After having put the club in default on several occasions, on 19 April 2017, the club settled all its debts towards the player until the month of March 2017.

6. Moreover, on 3 May 2017, ‘before the last match on May 4, 2017’, the player requested an exit visa from the club, ‘so he could return to Country B for annual leave’ by no later than 6 May 2017. The player further explains that the club did not reply to his letter, but that it nonetheless issued him the exit visa.

7. Furthermore, the player explains that on 9 June 2017, the club requested him in writing to join the pre-season camp in the city of Country D, which would start on 14 June 2017. According to the player, on 13 June 2017, he informed the club that due to illness, he could only return to the city of Country D on 18 June 2017 and also requested the club to deliver him the relevant flight tickets. The player further explains that on 14 June 2017, the club provided him in writing with the flight tickets, but that it also referred to alleged ‘unauthorized absence for vacation’ in the period between 6 May 2017 and 31 May 2017, which was apparently a reason for the club to withhold the payment of the salary for the months of April and May 2017.

8. Moreover, the player states that, after having returned to Country D, on 10 July 2017, he put the club in default for an amount of USD 552,498, corresponding to the unpaid salaries for the months of April, May and June 2017, as well as the sign-on fee in the amount of USD 360,000 for the season 2017/2018. The player holds that on 14 July 2017, during the club’s preseason training camp, he offered the club a mutual termination of the contract, which was however refused by the club. Moreover, the player explains that on 16 July 2017, the club informed him about disciplinary proceedings to be held, because of his alleged unauthorized absence in May 2017.

9. Subsequently, after the player sent the club a document which allegedly proved his illness on 12 June 2017, on 17 July 2017, the club informed him about the payment of the salary for April 2017. In addition, the player holds that the club also explained that the sign-on fee for the season 2017/2018 was only due on 1 August 2017, as the contract contained ‘a typographical error’, as well as that the salaries for May and June 2017 would be suspended ‘on full pay pending the investigation for unauthorized absence’.

10. Moreover, the player explains that on 22 July 2017, he took part in a disciplinary proceeding which was held at the club’s offices, in which meeting he ‘verbally received’ a proposal for a mutual termination of the contract. The player explains that said proposal was confirmed to him in writing on 25 July 2017.

11. What is more, the player argues that on 26 July 2017, he replied to the club, indicating that he refused to take part in any further disciplinary proceedings, and putting the club again in default for the payment of ‘all outstanding debts’. Finally, the player indicated that if he would not receive the outstanding amounts by 2 August 2017, he would initiate proceedings before FIFA and terminate the contract.

12. On 2 August 2017, after not having heard from the club, the player unilaterally terminated the contract, due to outstanding remuneration in the total amount of USD 558,332.

13. Finally, the player explains that after the termination of the contract, the club refused to issue him an exit visa, as a result of which the player was not able to leave Country D. The player holds that after he requested intervention of inter alia FIFA and FIFPro, on 4 August 2017, he received an exit visa and left Country D.

14. The club was invited to submit its reply to the player’s claim before 24 September 2017, and asked for a deadline extension on 21 September 2017, which was granted until 4 October 2017. However, on 4 October 2017, the club replied by stating that the player’s claim was allegedly illegible and asking FIFA to resend the claim.

15. After being informed by the FIFA administration that, in view of the foregoing circumstances, the investigation phase of the matter at hand was to be considered as closed as per 5 October 2016, on 5 October 2016, the club submitted an additional correspondence, indicating that it would lodge claim against the player for breach of contract, however in the end, never doing so.

16. Finally, the player informed FIFA that, on 31 August 2017, he signed an employment contract with the club of Country E, Club F, valid as from 12 October 2017 until 30 June 2019 and provided a copy of said contract. Based on this document, the player is entitled to receive a monthly salary of EUR 10,000 ‘net’, as well as a sign-on fee of EUR 210,000 gross, according to the player in total amounting to EUR 172,143 net for the 2017/2018 season.

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 31 August 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 (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. In this respect, the Chamber was eager to emphasize that contrary to the information contained in FIFA’s letter dated 18 January 2018 by means of which the parties were informed of the composition of the Chamber, the Member G and the Member H refrained from participating in the deliberations in the case at hand, due to the fact that the Member G has the same nationality as the player and that, in order to comply with the prerequisite of equal representation of club and player representatives, also the Member H refrained from participating and thus the Dispute Resolution Chamber adjudicated the case in presence of three members in accordance with art. 24 par. 2 of the Regulations.

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 31 August 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 the parties had signed an employment contract, valid as from 18 July 2016 until 17 July 2018, on the basis of which the player was entitled to receive the amount of USD 1,100,000 for the 2016/2017 season and the amount of USD 1,200,000 for the 2017/2018 season.

7. In continuation, the members of the Chamber noted that the player lodged a claim against the club, maintaining that he had terminated the employment contract with just cause on 2 August 2017, after previously having put the club in default. The player held that the club, as from the start of the contract, allegedly failed to pay him the remuneration he was entitled to, and that on 2 August 2017, three monthly salaries, in the total amount of USD 198,332, as well as a sign-on fee of USD 360,000 remained outstanding. Consequently, the player requested to be awarded his outstanding dues as well as the payment of compensation for breach of the employment contract.

8. 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, even within the extended deadline granted by FIFA, i.e. 4 October 2017. In fact, on 4 October 2017, the club requested FIFA to resend it the entire case, as the documents previously received were allegedly illegible. The FIFA Administration denied said request, as this was in facto a second request for an extension of the deadline, which is not allowed in accordance with art. 16 par. 11 of the Procedural Rules. Subsequently, the investigation phase in the matter at hand was closed.

9. What is more, after the closure of the investigation phase in the matter at hand, the club submitted unsolicited comments, indicating that it considered lodging a counterclaim towards the player, however effectively failing to do so until today.

10. Based on the foregoing, bearing in mind the Chamber’s constant jurisprudence in this regard and in application of art. 9 par. 3 and art. 16 par. 11 of the Procedural Rules, the members of the Chamber decided that the club’s request for an extension of the deadline was correctly denied by the FIFA Administration, as this was in fact to be considered a second request for an extension of the deadline. Furthermore, in the absence of a timely answer of the club, the investigation phase of the matter at hand was correctly closed in accordance with art. 9 par. 3 of the Procedural Rules.

11. What is more, the members of the Chamber recalled the wording of art. 9 par. 4 of the Procedural Rules, which provides inter alia for the following: ‘The parties shall not be authorised to supplement or amend their requests or their arguments, to produce new exhibits or to specify further evidence on which they intend to rely, after notification of the closure of the investigation.’ In this respect, the members of the Chamber decided to not take into account the unsolicited comments of the club, which were submitted after the closure of the investigation phase.

12. In view of the foregoing, the DRC established that it shall take a decision on the basis of those documents on file that were provided prior to the deadline set by FIFA and prior to the subsequent closure of the investigation phase, in casu, on the statements and documents presented by the player.

13. 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 player on 2 August 2017 with or without just cause, and subsequently, to determine the consequences of the early termination of the contractual relationship by the player.

14. In accordance with the employment contract, and taking into account that the player stated that the club failed to pay him his monthly salaries as from the start of the contract, the club was obliged to pay to the player at the time the contract was terminated, i.e. on 2 August 2017, the monthly salaries for the months May and June 2017 in the amount of USD 64,166 each, the salary for the month of July 2017 in the amount of USD 70,000, as well as a sign-on fee in the amount of USD 360,000, related to the 2017/2018 season.

15. In this respect, the Chamber wished to clarify that, although the contract contains a clause specifying that the amount of USD 360,000 for the 2017/2018 season would be payable already on 1 August 2016, it appeared that this is a clerical error in the contract, as the sign-on fee clearly refers to the 2017/2018 season. As a result, the Chamber deemed that the sign-on fee of USD 360,000 fell due on 1 August 2017.

16. On account of the aforementioned, in particular in view of the considerations under point II./14. and II./15. above, the Chamber established that the club, without any valid reason, failed to remit to the player, until 2 August 2017, the date on which the player terminated the contract, the total amount of USD 558,332. Consequently, and considering that the club had repeatedly and for a significant period of time been in breach of its contractual obligations towards the player, as well as article 3 of the contract, which contains a clear stipulation that the player may terminate the contract with just cause if three monthly salaries are outstanding, the Chamber decided that the player had just cause to unilaterally terminate the employment contract on 2 August 2017. As a result, the club is to be held liable for the early termination of the employment contact with just cause by the player.

17. 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, the Chamber focused its attention on the consequences of such termination.

18. 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 USD 558,332, consisting of the salaries for the months of May, June and July 2017, in the total amount of USD 198,332, as well as second part of the sign-on fee in the amount of USD 360,000.

19. 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 USD 558,332 as from 2 August 2017, as claimed by the player.

20. 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.

21. 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.

22. 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.

23. 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.

24. Bearing in mind the foregoing as well as the claim of the player, the Chamber proceeded with the calculation of the monies payable to the player under the terms of the employment contract until 17 July 2018, taking into account that the player was entitled to receive 12 payments of EUR 70,000 each for the 2017/2018 season, but that the salary for the month of July 2017 is included in the outstanding remuneration the player is entitled to receive (cf point II./14. and II./18. above. Consequently, the Chamber concluded that the amount of USD 770,000 serves as the basis for the determination of the amount of compensation for breach of contract.

25. 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.

26. Indeed, on 31 August 2017, the player found employment with the club of Country E, Club F. In accordance with the pertinent employment contract, which has been made available by the player, valid as from 12 October 2017 until 30 June 2019, the player was entitled to receive a monthly salary of EUR 10,000 net, as well as a sign-on fee of EUR 210,000 gross. Furthermore, the player explained in detail, and based on extensive documentation, that in the relevant period, i.e. the 2017/2018 season, said contract entitled him to receive a total amount of EUR 172,143 net. Consequently, the Chamber established that the value of the new employment contract concluded between the player and Club F for the period as from 31 August 2017 until 17 July 2018 amounted to EUR 172,143, or approximately USD 210,000.

27. 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 USD 560,000 to the player, which was to be considered a reasonable and justified amount of compensation for breach of contract in the present matter. In accordance with its established jurisprudence and taking into account the request of the player, the Chamber further decided that interest at the rate of 5% p.a. was to be applied over the amount of USD 560,000 as from 25 January 2018, i.e. the date of the decision.

28. 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, outstanding remuneration in the amount of USD 558,332, plus 5% interest p.a. as of 2 August 2017 until the date of effective payment.

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 in the amount of USD 560,000, plus 5% interest p.a. on said amount as from 25 January 2018 until the date of effective payment.

4. In the event that the amounts due to the Claimant in accordance with the above-mentioned numbers 2. and 3. are not paid by the Respondent within the stated time limits, 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