F.I.F.A. – Dispute Resolution Chamber / Camera di Risoluzione delle Controversie – labour disputes / controversie di lavoro (2018-2019) – fifa.com – atto non ufficiale – Decision 15 November 2018

Decision of the

Dispute Resolution Chamber

passed in Zurich, Switzerland, on 15 November 2018,

in the following composition:

Geoff Thompson (England), Chairman

Roy Vermeer (The Netherlands), member

Johan van Gaalen (South Africa), member

Wouter Lambrecht (Belgium), 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

arisen between the parties

I. Facts of the case

1. On 30 December 2015, the Player of Country B, Player A (hereinafter: the Claimant) and the Club of Country D, Club C (hereinafter: the Respondent), concluded an employment contract (hereinafter: the contract), valid from 1 January 2016 until 31 May 2018.

2. On 25 April 2017, the Claimant and the Respondent signed a document titled “Settlement Agreement” (hereinafter: the settlement agreement).

3. Clause 1 of the settlement agreement stipulated, inter alia, the following:

“The club shall pay irrevocably to the Player $ 1,130,000 (i.e. one million one hundred thirty thousand USD) NET as compensation for breach of contract of employment and interests for the final settlement of the above-mentioned dispute (FIFA DRC decision). This payment of compensation shall be wire transferred by the Club to the Player which ventilation as follows:

- $ 530,000 (i.e. five hundred thirty thousand USD) NET at last on the day of the signature of the Settlement Agreement;

- $ 600,000 (i.e. six hundred thousand USD) NET at last on 21 July 2017. […]

[…] If the club doesn’t pay one of the instalments within the prescribed above mentioned deadlines, for some reason that it is and without prior formal notice from the player, the club is indebted without delay of the total sum due on basis of the FIFA DRC decision (i.e. $ 1,330,000 NET increased by an interest at 5% per annum from 12 June 2016 until the date of effective payment) and with a supplementary fix penalty amounting to EUR 30,000 (i.e. thirty thousand EUR)”.

4. Clause 2 of the settlement agreement further reads as follows:

“By virtue of this Settlement Agreement, the parties declare that all financial relations between them with regard to the final and definitive FIFA DRC decision dated on 13th October 2016, are finally and completely resolved, subject to the terms of this Settlement Agreement being fully and duly complied with by the club, as set out in clause 1 above”.

5. By means of a correspondence dated 13 May 2017, the Claimant put the Respondent in default of payment of USD 530,000, corresponding to the first instalment due under the settlement agreement. In this regard, the Claimant granted the Respondent a deadline of three days by which to pay him the specified amount, failing which he would claim, in accordance with clause 1 of the settlement agreement and FIFA’s decision passed on 13 October 2016, the total amount of USD 1,330,000, plus interest. Moreover, the Claimant underlined that he would also be entitled to claim “a supplementary fix penalty amounting to EUR 30,000” as specified in clause 1 of the settlement agreement.

6. By means of a correspondence dated 19 May 2017, the Claimant informed the Respondent that he “makes application of article 1, in fine, of the Settlement Agreement” since no payment has been made by the Respondent and put the latter in default of payment of EUR 30,000, corresponding to the penalty clause included in the settlement agreement. In this regard, the Claimant granted the Respondent a deadline of 15 days in order to remedy the default.

7. On 9 June 2017, the Claimant put the Respondent in default of the amount of EUR 30,000, setting a 10 days’ time limit in order to remedy the default and considered it to be “an ultimate warning”.

8. On 20 June 2017, the Claimant lodged a claim before FIFA requesting that the Respondent pay him the amount of EUR 30,000, corresponding to the penalty clause, which was included in clause 1 of the settlement agreement.

9. In his claim, the Claimant underlined that the Respondent had not responded to the two formal notices of 19 May 2017 and 9 June 2017 and stated that since the Respondent failed to pay the first instalment within the relevant period of time as stipulated in the settlement agreement, i.e. “on the date of signature of the settlement agreement”, he was entitled to claim the penalty clause according to clause 1 of the settlement agreement and in compliance with the legal principle of “pacta sunt servanda”.

10. 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 20 June 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 June 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 of Country B and a Club of Country D.

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 (2016 and 2018 editions) and considering that the present claim was lodged in front of FIFA on 20 June 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 on 30 December 2015, the Claimant and the Respondent signed a document titled “Settlement Agreement” on 25 April 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 “Settlement Agreement”, the Respondent undertook to pay the Claimant the amount of USD 1,130,000 by means of two instalments of USD 530,000 and USD 600,000, falling due, respectively, “on the day of the signature of the Settlement Agreement” and on 21 July 2017.

7. Equally, the Chamber noted that clause 1 of the “Settlement Agreement” established that “[…] If the club doesn’t pay one of the instalments within the prescribed above mentioned deadlines, for some reason that it is and without prior formal notice from the player, the club is indebted without delay of the total sum due on basis of the FIFA DRC decision (i.e. $ 1,330,000 NET increased by an interest at 5% per annum from 12 June 2016 until the date of effective payment) and with a supplementary fix penalty amounting to EUR 30,000 (i.e. thirty thousand EUR)”.

8. In continuation, the members of the Chamber noted that, according to the Claimant, the Respondent had failed to pay the first instalment due under the “Settlement Agreement” within the relevant deadline. The DRC further noted that the Claimant put the Respondent in default of payment of the aforementioned amount on 13 May 2017.

9. Moreover, the DRC noted that the Claimant, by means of a correspondence dated 19 May 2017, informed the Respondent that the penalty clause provided in the “Settlement Agreement” had been triggered and put the latter in default of payment of EUR 30,000, corresponding to said penalty clause. 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 “Settlement Agreement”.

10. 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 and accepted the allegations of the Claimant.

11. 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.

12. Having said that, the members of the Chamber firstly underlined that it remained uncontested that the first instalment of USD 530,000, which fell due “on the date of signature of the settlement agreement”, i.e. on 25 April 2017, had not been paid by the Respondent within the prescribed deadline. Consequently, the DRC agreed with the Claimant’s conclusion that the penalty clause envisaged therein had been triggered.

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

14. 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. In this respect, the Chamber highlighted that in order to determine as to whether a penalty clause is to be considered acceptable, the specific circumstances of the relevant case brought before it shall also be taken into consideration.

15. In the specific case at hand, the members of the Chamber deemed that the penalty clause of EUR 30,000, which the parties contractually agreed upon in the context of terminating the employment relation, is both proportionate and reasonable in the case at hand. Consequently, the Chamber decided that said contractual penalty fee is valid and applicable in the present matter.

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 30,000 to the Claimant.

III. Decision of the Dispute Resolution Chamber

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

2. The Respondent, Club C, has to pay to the Claimant the amount of EUR 30,000, within 30 days as from the date of notification of this decision.

3. In the event that the amount due to the Claimant in accordance with the abovementioned number 2. 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 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

e-mail: info@tas-cas.org

For the Dispute Resolution Chamber:

Emilio García Silvero

Chief Legal & Compliance Officer

Encl.: CAS directives