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 31 August 2017

Decision of the petz

Dispute Resolution Chamber

passed in Zurich, Switzerland, on 31 August 2017,

in the following composition:

Geoff Thompson (England), Chairman

Theo van Seggelen (Netherlands), member

Wouter Lambrecht (Belgium), member

Todd Durbin (USA), member

Takuya Yamazaki (Japan), 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

arisen between the parties

I. Facts of the case

1. On 9 September 2013, 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) signed an employment contract, valid as from an unspecified date until the end of the season 2013/2014 as well as the end of the Continental Cup (one season) (hereinafter: the first contract).

2. According to article 1 of the first contract, the player was entitled to receive a total amount of USD 100,000, ‘with a monthly salary of 1,250,000’ in the currency of Country D, payable as follows:

 50% ‘upon signing of the contract’;

 25% ‘at the start of the second phase’;

 25% ‘at the end of the league’.

3. On 15 September 2014, the player and the club signed another document, valid as from an unspecified date until the end of the season 2014/2015 as well as the end of the Continental Cup (one season) (hereinafter: the second contract).

4. According to article 1 of the second contract, the player was entitled to receive a total amount of USD 105,000, ‘with a monthly salary of 1,250,000’ in the currency of Country D’, payable as follows:

 50% ‘upon signing of the contract’;

 25% ‘at the start of the second phase’;

 25% ‘at the end of the league’.

5. On 14 July 2016, the player lodged a claim before FIFA against the club, claiming compensation for breach of contract in the total amount of USD 230,768 to be paid by the club, broken down as follows:

Residual value of the first contract in the total amount of USD 112,884, specified as follows:

 the sign-on fee in the amount of USD 100,000;

 the outstanding monthly salaries in the amount of 1,250,000 each, or according to the player amounting to USD 1,736, in the total amount of “USD 12,884”.

Residual value of the second contract in the total amount of USD 117,884, specified as follows:

 the sign-on fee in the amount of USD 105,000;

 the outstanding monthly salaries in the amount of 1,250,000 each, or according to the player amounting to USD 1,736, in the total amount of “USD 12,884”.

In addition, the player asked for sanctions ‘pursuant to article 12bis (par)s 2, 3, 4 and 5’ to be applied on the club.

6. In his claim, the player explains that during the seasons 2013/2014 and 2014/2015, he was under contract with the club. Furthermore, the player holds that on 22 May and 29 June 2016, he put the club in default for the payment of the amount of USD 230,768 (cf. point 5. above), as he allegedly did not receive any of the amounts payable under the first and second contract. The player holds that the club did not reply to these default letters.

7. In its reply, the club denies the player’s allegations and states that the two contracts are separate documents and holds that ‘the second contract was not an extension to the first contract nor there is any link joining the two contracts’. Furthermore, the club explains that the first contract was valid as from the date of signature, i.e. 9 September 2013 (cf. point 1. above) until the end of the season 2013-2014, according to the club 15 June 2014. In addition, the club states that the second contract was valid as from the date of signature, i.e. 15 September 2014 (cf. point 3. above) until the end of the season 2014-2015, according to the club 15 June 2015. Moreover, the club argues that in the period between 15 June and 15 September 2014, the player was not employed by the club, and ‘rather was free to sign with any team of his choice’.

8. Subsequently, the club argues that all claims related to the first contract must be considered time-barred, as the events giving rise to the dispute occurred on 15 June 2014 and the claim was only lodged on 14 July 2016. What is more, the club points out that ‘if one were to agree with the claimant’s claim that none of his remuneration for the season 2013-2014 was paid, one fails to understand why he signed a new contract with the Respondent for the following season (i.e. season 2014-2015) and why no reference to said unpaid remuneration was mentioned in the second contract’.

9. In addition, the club holds that the monthly salary of 1,250,000 amounts to USD 1,000, and not to USD 1,736 as stated by the player, as well as that the player is only entitled to 9 monthly salaries and a sign-on fee of USD 100,000. As a result, the total value of the first contract is USD 109,000.

10. Further, the club points out that ‘due to the international sanctions imposed against Country B which bans money transfer to Country B through the banking channels’, it could only pay the player ‘his values in form of cash’, and that this was done on the first business day of the month. For the sign-on fee, the club explains that it paid this amount in instalments.

11. Moreover, the club argues that during the season 2013-2014, it paid all the monthly salaries of the player, as well as the amount of USD 76,520 in relation to the sign-on fee.

12. In addition, the club holds that the Income Tax Law of Country D applies to the first contract, and that based on article 2 of said law, the income of the player is taxable at 15%, and that based on article 28 par. 4 of said law, an additional 10% can be deducted by the club, which can only be released to the player ‘when he obtains a certificate of clearance from income tax’ and submits this document to the club. The club further explains that the player did not file his income tax declaration related to the 2013-2014 season, and that as a result, he cannot provide the club with the mentioned certificate of clearance.

13. As a result of the foregoing, the amounts of USD 16,350 (15%), as well as USD 10,900 were deducted from the total value of the first contract of USD 109,000, resulting in a total payable amount of USD 81,750. As the club had paid already the amount of USD 76,520 to the player, it concludes that the remaining outstanding remuneration in relation to the first contract can only be USD “5,300”. In conclusion, the club states that once the player has filed his income tax declaration, which he is obliged to do based on the Income Tax Law of Country D, it will immediately release the amounts of USD 5,300 and USD 10,900 to the player related to the first contract.

14. In relation to the 2014-2015 season, the club argues that all claims related to the second contract cannot be dealt with by FIFA, as this matter ‘is not pertaining to an employment related issue but in fact it is relating to an income tax matter’. The club further alleges that this matter could only be decided by FIFA if the player ‘had fully discharged the obligations imposed on him by the Tax Law’ or if the player ‘had submitted evidence establishing that the Respondent had promised to pay his income tax instead of him’.

15. In addition, the club states that the monthly salary of 1,250,000 amounts to USD 1,000, and not to USD 1,736 as stated by the player, as well as that the player is only entitled to 9 monthly salaries and a sign-on fee of USD 105,000. As a result, the total value of the first contract is USD 114,000.

16. Moreover, the club argues that during the season 2014-2015, it paid all the monthly salaries of the player, which is also acknowledged by the player (cf. point 19. below). In addition, the club holds that the player refused to receive his sign-on fee for the season 2014-2015, ‘save no taxes were to be deducted from it’. The club further states that on 14 October 2014, its financial department explained to the player that based on the Country D Tax Law, taxes had to be deducted from the sign-on fee.

17. In addition, the club argues that since the player also did not file his tax income declaration in relation to the 2014-2015 season, it could validly deduct (cf. point 13. above), a percentage of 15% (USD 17,100) and a percentage of 10% (USD 11,400) from the total value of the contract in the amount of USD 114,000. Further, because the player did not file his tax declaration for two consecutive seasons, the club holds that it could validly deduct another 30% (USD 34,200) from the receivables of the player. As a result, the club concludes that the remaining outstanding part of sign-on fee in relation to the second contract, is USD 42,300 (i.e. USD 114,000 minus USD 17,000 minus USD 11,400 minus USD 34,300 minus USD 9,000 as salary).

18. In conclusion, the club explains that the player has two options:

 To file his income tax declaration for the years 2013-2014 and 2014-2015, as a result of which he can present a certificate of clearance to the club, based on which he will receive from the club – in addition to his right to receive tax refund - the total amount of USD 61,800:

- USD 10,900 (cf. point 13. above);

- USD 5,300 (cf. point 13. above);

- USD 11,400 (cf. point 17. above);

- USD 34,200 (cf. point 17. above).

 To not file his income tax declaration for the years 2013-2014 and 2014-2015. The club states that based on this option, the player is only entitled to USD 42,300 (cf. point 17. above), and maybe ‘if the financial authority of Country D did not discover such failure to file his income tax returns at the expiry of the five years statutes of limitation’, the same amount of USD 61,800 as mentioned above.

19. In his replica, the player confirms that he received all his monthly salaries for the seasons 2013-2014 and 2014-2015. Further, the player states that USD 34,300 of the sign-on fee of USD 100,000 related to the 2013-2014 remained outstanding, as well as USD 105,000 as sign-on fee related to the season 2014-2015.

20. Further, the player alleges that his ITC remained at the club as from the start of the 2013-2014 season until the end of the 2014-2015 season and that he ‘was on service with the Respondent two seasons’, as well as ‘in the between months’. Based on this ‘continuous employment service […] during the in between months’, the player argues that the claimed amounts as per the first contract cannot be time-barred.

21. In addition, the player argues that the terms of both contracts did not mention that he ‘has to pay for the local authority any taxes including the income tax’. Moreover, the player states that if this income tax needs to be paid, it should have been deducted ‘from the employee income’ by the club, which according to the player follows from article 17 and 18 of the ‘Income Tax Law 113 1982’. The player holds that despite the club’s responsibility to pay these taxes, it never did so.

22. In conclusion, the player amends his claim and holds that the club is liable for the payment of the total outstanding amount of USD 139,300 (i.e. USD 34,300 plus USD 105,000, cf. point 19. above).

23. In its duplica, the club states that the player falsely and deliberately claimed the amount of USD 230,768, only later amending his claim to the amount of USD 139,300. Furthermore, the club states that it was not aware ‘of any regulations that require a club to immediately release the player’s ITC the moment his contract had expired, and if so, to whom his ITC shall be released’. Moreover, the club points out that the player remained unemployed in the three months between the first and the second contract.

24. Finally, the club draws the attention to the fact that it is the player’s responsibility to seek legal advice, when signing a contract with a foreign club and being advised about possible responsibilities to pay taxes. In conclusion, the club holds that the law of Country D is applicable to the contract and that the club is prohibited to disclose any information related to income taxes to third parties. In conclusion, the club argues that the player is not entitled to receive the amounts deducted as income tax, as these taxes belong ‘to 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 present matter was submitted to FIFA on 14 July 2016. Consequently, the Rules governing the procedures of the Players’ Status Committee and the Dispute Resolution Chamber (edition 2015; 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 2016) the Dispute Resolution Chamber would, in principle, be 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 an Club of Country D.

3. What is more, the DRC duly noted that – in view of the date of the player’s claim and the club’s allegations regarding its supposed prescription, and before addressing the substance of the matter, it should first examine if the present claim, or any part of it, could possibly be time-barred. In this respect, the Chamber noted that the first employment contract at the basis of the dispute was concluded on 9 September 2013. The Chamber further noted that the player lodged his claim before FIFA on 14 July 2016, claiming allegedly outstanding salaries as from the month of September 2013.

4. In this respect, the members of the Chamber referred to art. 25 par. 5 of the Regulations, which, in completion to the general procedural terms outlined in the Procedural Rules, clearly establishes that the decision-making bodies of FIFA shall not hear any dispute if more than two years have elapsed since the event giving rise to the dispute arose and that the application of this time limit shall be examined ex officio in each individual case.

5. Bearing in mind the foregoing, the DRC referred to the claim of the player, based on which he requested inter alia the payment of USD 34,300, as outstanding part of the sign-on fee of USD 100,000 for the 2013-2014 season. In this respect, the DRC noted that the last part of said sign-on fee, 25% (cf. point I./4. above), was due at the latest ‘at the end of the league’. From the information in the Transfer Matching System (TMS), it can be established that the League of Country D for the 2013/2014 season ended on 21 June 2014 at the latest. Furthermore, the DRC also noted that the player equally claimed the payment of allegedly outstanding salaries pertaining to the first contract. In this respect, the DRC pointed out that the first contract was valid until the end of the season 2013/2014, which according to the information contained in the TMS ended on 21 June 2014 at the latest.

6. As a consequence, recalling that the present claim was lodged on 14 July 2016, the DRC concluded that the time limit of two years had elapsed for claiming any payments due under the first contract. Therefore, this part of the player’s claim is to be considered time-barred and consequently inadmissible. The Chamber concluded its reasoning by stating that the player’s other requests, i.e. the amounts claimed under the second contract, were made within the 2 years’ time limit and, therefore will be further analysed as to their substance.

7. 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.

8. The members of the Chamber first acknowledged that the parties were contractually bound by means of an employment contract referred to as the second contract, signed on 15 September 2014 and valid as from an unspecified date until ‘the end of the season 2014/2015 as well as the end of the Continental Cup (one season)’ and that the player inter alia was entitled to receive a sign-on fee of USD 105,000.

9. Furthermore, the DRC noted that the player, on the one hand, maintained that the club failed to pay him said sign-on fee of USD 105,000. The club, on the other hand, rejected the claim put forward by the player and stated that he failed to fulfil his fiscal obligations in Country D, as a result of which it had to deduct several amounts from the total value of the sign-on fee, which resulted according to the club to an outstanding amount of only USD 42,300. Further, the club argued that the player will receive said amount if he complies with his obligation to file his tax declaration in Country D for the 2014-2015 season.

10. In continuation, the Chamber took into account that the player fully rejected the club’s allegations and indicated that it was the club’s responsibility to deduct the relevant taxes from his salary and/or to pay these taxes to the national authorities in Country D, as well as that the club in its final reply pointed out that it is the responsibility of the player to be aware of the legal and fiscal consequences when signing a contract.

11. In view of the aforementioned considerations, the members of the Chamber highlighted that the underlying issue in this dispute, considering the diverging position of the parties, was to determine whether the club had fulfilled all its obligations towards the player as per the second contract or whether it had a valid reason not to have done so.

12. Before entering into the analysis of the above-posed question, the members of the Chamber recalled the basic principle of burden of proof, as stipulated in art. 12 par. 3 of the Procedural Rules, according to which a party claiming a right on the basis of an alleged fact shall carry the respective burden of proof.

13. Entering into the substance of the matter at hand, the members of the Chamber focused their attention on the contents of the second contract that was signed between the parties and their intention, when signing said contract.

14. In this respect, the members of the Chamber noted that the second contract did not contain a specific clause, aiming at determining whether taxes should be deducted from the amounts the player was entitled to receive, or which party was responsible for the payment of these taxes.

15. Moreover, the Chamber observed that the second contract inter alia establishes a sign-on fee payable to the player the amount of USD 105,000, without making any reference as to whether such amount should be considered net or gross. In order to preserve the good faith of the player when signing the second contract, and in the absence of any evidence to the contrary, the Chamber concluded that the amount therein established is to be considered as net, as well as that the player could validly believe that such amount should be paid out to him in its entirety. In view of this specific point, the members of the Chamber agreed that in principle, a party signing a document of legal importance without knowledge of its precise legal effects, as a general rule, does so on its own responsibility. According to the Chamber, said responsibility is however limited. In situations in which the wording of specific clauses is insufficiently clear, in general, it would be the employer, as the stronger party in the employment relationship, to bear the consequences of the lack of clarity in specific parts of the contract.

16. Furthermore, the Chamber noted that the club did not provide consistent evidence that it was obliged to withhold any percentage of the remuneration of the player in order to guarantee the payment of income taxes or that it actually paid those taxes on behalf of the player to the relevant authorities. Consequently, the DRC concluded that the club did not meet its burden of proving that the amounts due to the player as per the contract were paid or that it had a valid reason not to pay him these amount sin their entirety.

17. Based on the foregoing circumstances, the members of the Chamber established that the club did not sufficiently substantiate its defence, as it did not present any evidence that the player was responsible for the payment of the taxes as per the second contract, or that it paid these taxes directly to the relevant national authority In Country D.

18. As a result, and by reiterating the contents of art. 12 par. 3 of the Procedural Rules, the members of the Chamber concurred that the club could not prove that it fulfilled all its obligations as per the second contract. Moreover, in accordance with the general legal principle of “pacta sunt servanda”, it must fulfil its obligations as per the second contract and, consequently, is to be held liable to pay the sign-on fee in the amount of USD 105,000 to the player.

19. 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 105,000 to the player.

20. The Chamber concluded its deliberations in the present matter by accepting the player’s claim, insofar it is considered admissible.

III. Decision of the Dispute Resolution Chamber

1. The claim of the Claimant, Player A, is accepted insofar it is admissible.

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 105,000.

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 FIFA’s Disciplinary Committee for consideration and a formal decision.

4. 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.

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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 / www.tas-cas.org

For the Dispute Resolution Chamber:

Omar Ongaro

Football Regulatory Director

Encl.: CAS directives