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 14 September 2018

Decision of the

Dispute Resolution Chamber

passed in Zurich, Switzerland, on 14 September 2018,

in the following composition:

Geoff Thompson (England), Chairman

Jérôme Perlemuter (France), member

Elvis Chetty (Seychelles), member

Stefano Sartori (Italy), 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 1 June 2016, the player of Country B, Player A (hereinafter: Claimant), and the club of Country D, Club C (hereinafter: Respondent), signed an employment contract valid as from 8 June 2016 until 1 November 2016.

2. According to art. 1.1. the Respondent “agrees to provide the [Claimant] with work as per labor function, work conditions as per the Labor Code of Country D […], current legislation and other regulatory acts of the Country D”.

3. According to art. 3 of the employment contract, the Claimant was entitled to a monthly salary of 1,467,917 in the currency of Country D to be paid “no later than during the first decade of the following month”.

4. Furthermore, art. 10.2 of the employment contract established the following trial period: “the Employee is to undergo a trial period from the first day on which this Contract goes into effect until September 7, 2016. During the paid trial, the Employee is subject to all regulations of the Code and this Contract”.

5. On 1 June 2016, the parties also signed a “Supplement #1 to the employment contract” (hereinafter: supplement), according to which, inter alia, the Claimant was entitled to “free meals at the rate of 2893 in the currency of Country D/day”.

6. On 10 August 2016, the Respondent unilaterally terminated the contract in writing with immediate effect, alleging that, according to its coach, the Claimant had “shown negative (unsatisfactory) results during the three-month trial period”.

7. On 4 May 2017, the Claimant addressed a correspondence to the Respondent, putting the latter in default of payment of 4,269,180 in the currency of Country D.

8. On 15 May 2017, the Respondent replied to the Claimant referring to the contractual trial period and the coach’s conclusion on his performance. The Respondent further held that it had no outstanding dues towards the Claimant.

9. On 11 September 2017, the Claimant lodged a claim against the Respondent in front of FIFA for breach of contract, requesting:

a. that the Respondent be ordered to pay 244,250 in the currency of Country D as outstanding remuneration until August 2016, plus 5% interest p.a. as of 10 August 2016;

b. that the Respondent be ordered to pay 4,024,930 in the currency of Country D, as compensation for breach of contract (namely, 1,467,917 in the currency of Country D each for August and September 2016 and 1,089,096 in the currency of Country D for October 2016), plus interest as follows:

i. 5% p.a. on 1,467,917 in the currency of Country D as of 10 September 2016;

ii. 5% p.a. on 1,467,917 in the currency of Country D as of 10 October 2016;

iii. 5% p.a. on 1,089,096 in the currency of Country D as of 10 November 2016.

10. More specifically, the Claimant argued that, on 10 August 2016, the Respondent terminated the contract without just cause, since the explanation given by the Respondent was purely “subjective”.

11. Furthermore, the Claimant explained that, at the time the Respondent terminated the contract, the latter still owed him the amount of 244,250 in the currency of Country D, in accordance with the provisions of the employment contract and the supplement.

12. In its reply, the Respondent asked that the claim be rejected, as it had allegedly terminated the contract in accordance with its provisions and labour law of Country D.

13. In this respect, the Respondent explained that, according to art. 36 of the Labour Code of the Country D, the parties to an employment contract can agree to set “a condition of probation in order to verify the conformity of the proposed qualifications work”.

14. In relation to the above, the Respondent argued that the Claimant had displayed a “poor level of sportsmanship” and that, consequently, the Respondent decided to follow the coach’s indication and dismiss him.

15. Moreover, the Respondent claimed that, at the time of termination of the contract, the Claimant had been paid his salaries in full. In this respect, the Respondent pointed out that the Claimant had received a single payment of 2,000,000 in the currency of Country D and that the amount of 2,893 in the currency of Country D for accommodation and daily meals was paid directly to the hotel “Hotel E”, which was where the Claimant allegedly stayed throughout the employment relationship. In support of its position, the Respondent submitted the following documents:

i. a signed copy of an Appendix to the contract dated 12 July 2016, according to which the parties had agreed, amongst other things, to “amend [art.] 3.1 of the employment contract as follows: To pay an Employee a single time payment at the amount of 2,000,000 […] in the currency of Country D in June 2016”;

ii. a copy of a “payment order” towards the player of 1,800,000 in the currency of Country D dated 21 July 2016;

iii. copies of “food price lists” of the hotel “Hotel E”, which indicate the Claimant’s name, the number of nights he resided at the hotel as well as the “price per night” of 2,893 in the currency of Country D in June and July and 4,878 in the currency of Country D in August 2016 totalling the amount of 192,691 in the currency of Country D for the Claimant over 57 nights.

16. In his replica, the Claimant entirely reiterated his position, adding that art. 10.2 of the employment contract was not reciprocal and, therefore, should be considered null and void. In respect of his financial claims, the Claimant argued that the Respondent, in its reply, had “submitted the evidence of payment but did not provide any evidence challenging [his] claims in the amount of 244,250 in the currency of Country D”. The Claimant added that the receipts submitted by the Respondent were not signed by him and, as such, could not produce any legal effect.

17. In its duplica, the Respondent substantially reiterated the position expressed in its reply to the claim.

18. However, concerning the Claimant’s financial claims, the Respondent informed of allegedly “newly discovered circumstances”. In this respect, the Respondent explained that, after a change of management, it went through all the documents in its possession and “came to the following conclusion”: on 1 July 2016 the parties had signed a first appendix to the contract, according to which the Claimant’s monthly salary was reduced to 1,117,000 in the currency of Country D. According to the Respondent, on 12 July 2016, the parties signed a further appendix in order to compensate for the Claimant’s decrease of salary establishing a lump sum of 2,000,000 in the currency of Country D in favour of the latter, “which was paid on 22 July 2016 in the amount of 1,800,000 […] in the currency of Country D including tax”.

19. In relation to the outstanding dues, the Respondent further argued that it had agreed to concede the Claimant an unpaid period of vacation from 8 until 30 June 2016 at the Claimant’s request. In light of that, and the fact that it had allegedly made two further payments towards the Claimant on 2 and 12 August 2016 for a total amount of 1,073,843 in the currency of Country D, the Respondent argued that it had fully complied with its financial obligations.

20. Upon request of the FIFA administration to present his comments on the new documents presented by the Respondent, the Claimant reiterated his position and stressed that the Respondent had not presented any evidence that would challenge his claim. The Claimant further informed that he remained unemployed until 27 January 2017, i.e. after the ordinary expiry of his contract with the Respondent, when he signed a contract with the club of Country B, Club F.

II. Considerations of the Dispute Resolution Chamber

1. First of all, the Dispute Resolution Chamber (hereinafter also referred as DRC or Chamber) analysed whether it was competent to deal with the case at hand. In this respect, the Chamber took note that the present matter was submitted to FIFA on 11 September 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: Procedural Rules) is applicable to the matter at hand (cf. art. 21 of the 2017 and 2018 editions 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. 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 (editions 2016 and 2018), and considering that the present claim was lodged on 11 September 2017, the 2016 edition of said regulations (hereinafter: Regulations) is applicable to the matter at hand as to the substance.

4. 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.

5. Having said that, the members of the Chamber acknowledged that, on 1 June 2016, the Claimant and the Respondent concluded an employment contract valid as from 8 June 2016 until 1 November 2016, pursuant to which the Claimant was entitled to a monthly salary of 1,467,917 in the currency of Country D to be paid “no later than during the first decade of the following month”. Moreover, the members of the Chamber observed that, on the same day, the parties signed a supplement to the contract, pursuant to which the Claimant was entitled to “free meals at the rate of 2893 in the currency of Country D/day”.

6. The DRC further took note that, according to art. 10.2 of the employment contract, the Claimant was subject to a 3-month paid trial period.

7. Furthermore, and in light of the parties’ submissions throughout the proceedings, the DRC observed that, during the course of the employment relationship, the parties signed two subsequent appendixes to the contract. The first one, allegedly signed on 1 July 2016, had the effect of reducing the Claimant’s monthly salary to 1,117,000 in the currency of Country D. The second one, signed on 12 July 2016, provided a lump sum of 2,000,000 in the currency of Country D in favour of the Claimant.

8. The DRC subsequently acknowledged that, according to the Claimant, the Respondent unlawfully terminated the employment relationship making use of a contract’s clause which, in his opinion, was not reciprocal and, as such, had to be considered null and void. Moreover, the Chamber observed that, according to the Claimant, at the time of termination 244,250 in the currency of Country D were outstanding.

9. Furthermore, the Chamber took note that the Respondent, for its part, deemed that it had just cause to terminate the contract since it had allegedly acted in accordance with its provisions and labour law of Country D. The DRC further observed that the Respondent maintained that it had fully complied with its financial obligations by the time the employment relationship was brought to an end.

10. On account of the above, the Chamber highlighted that the underlying issue in this dispute was to determine as to whether the employment contract had been terminated by the Respondent with or without just cause. More specifically, and considering the disagreement of the parties on this point, whether the Respondent could lawfully make use of art. 10.2 of the employment contract in order to prematurely terminate the employment relationship with the Claimant.

11. The Chamber also underlined that, subsequently, if it were found that the employment contract had been terminated without just cause, it would be necessary to determine the consequences for the party that was responsible for the early termination of the contractual relation.

12. Having said that, the members of the DRC deemed it worthwhile to recall the tenor of the aforementioned clause, which reads as follows: “the Employee is to undergo a trial period from the first day on which this Contract goes into effect until September 7, 2016. During the paid trial, the Employee is subject to all regulations of the Code and this Contract”.

13. In respect of the foregoing, the members of the Chamber, first and foremost, noticed that the clause had a non-reciprocal character, as it established a right solely in favour of the Respondent, inevitably resulting in an unbalanced employment relationship between the parties. What is more, the DRC could not endorse the interpretation that the Respondent gave of such clause when it maintained that, in light of its wording, it could lawfully dismiss the Claimant during the initial three months at its own discretion, for instance because of “poor level of sportsmanship”.

14. In other words, the Chamber held that it could not recognise a contractual provision which had, substantially, the effect of providing for a unilateral termination right in favour of the club only. Therefore, the Chamber decided that the Respondent could not legitimately terminate the contract with the Claimant making use of its art. 10.2. In this regard, the Chamber was equally eager to emphasise that it intended to avoid any broad-brush conclusion on the legality of trial periods in and by themselves and, thus, its determination was rather reached in light of the circumstances of the case.

15. For the sake of argument, although confident that the foregoing line of reasoning was self-explaining, the members of the DRC observed that, even assuming that the Respondent’s decision had been taken in accordance with labour law of Country D, as the latter claimed, such argument could not be upheld. In this regard, bearing in mind art. 12 par. 3 of the Procedural Rules, according to which any party claiming a right on the basis of an alleged fact shall carry the burden of proof, the DRC underlined that the Respondent did not submit any evidence corroborating its assumption concerning national labour law.

16. On account of the aforementioned considerations, the Chamber was of the unanimous opinion that the Respondent did not have a valid reason to prematurely terminate the employment contract on 10 August 2016. Consequently, the Chamber decided that the Respondent is to be held liable for the early termination of the employment contact without just cause.

17. In continuation, prior to establishing the consequences of the termination of the employment contract without just cause by the Respondent, the Chamber decided that the latter must fulfil its obligations as per the employment contract in accordance with the general legal principle of “pacta sunt servanda”.

18. In this respect, the members of the Chamber deemed it worthwhile to recall, first of all that, according to the Respondent, on 1 July 2016 the parties had signed an appendix to the contract, pursuant to which the Claimant was due to receive the monthly salary of 1,117,000 in the currency of Country D, rather than the originally established higher amount of 1,467,917 in the currency of Country D, leaving the rest of the obligations provided in the employment contract unaltered. The DRC further took note that the Respondent attached a copy of said appendix duly signed by both the parties and that the Claimant did not contest its validity. Therefore, the Chamber concluded that the monthly salary to be taken into account was the one provided in the appendix, i.e. 1,117,000 in the currency of Country D.

19. Moreover, the members of the DRC observed that the Respondent attached to its submissions a further appendix, allegedly concluded shortly after the previous one. In this regard, the DRC took note that also said document was duly signed by both the parties and that the Claimant did not contest its validity. However, the Chamber was also mindful of the fact that, according to the Respondent itself, such appendix, providing for a lump sum of 2,000,000 in the currency of Country D to be paid in favour of the Claimant, had simply the purpose of making up for the decrease in monthly salary that the previous appendix had determined.

20. The foregoing being said, the members of the DRC turned their attention to the question as to whether the Claimant was entitled to any outstanding remuneration and, in the affirmative, to the amount.

21. In this respect, the Chamber noted that the Respondent claimed having fulfilled all its financial obligations towards the Claimant until the moment it terminated the employment contract. However, mindful of the above-mentioned provision of the Procedural Rules, the DRC concurred in the conclusion that the Respondent did not submit satisfactory evidence to that end.

22. More specifically, the members of the Chamber were eager to emphasise that all the documents produced by the Respondent in order to attest the payments allegedly made towards the player bear a reference to “payment of salary under the Contract #17 of 8.11.2011”. In other words, after having carefully considered the evidence before it, the DRC could not conclude that said payments were indeed referred, beyond any reasonable doubt, to the Claimant and the employment contract signed on 1 June 2016. Consequently, the DRC decided that they could not be taken into account.

23. Once more, for the sake of the argument, the Chamber observed that, even taking the above-mentioned payments into account, the Respondent could not validly maintain that it had fulfilled its financial obligations until the moment it terminated the contract. According to its last submission, in fact, the Respondent argued that it had paid the Claimant 1,800,000 in the currency of Country D on 22 July 2016 in order to cover the lump sum of 2,000,000 in the currency of Country D provided by the second appendix and the total amount of 1,073,843 in the currency of Country D with two more separate payments. However, the Chamber recalled that said lump sum, as admitted by the Respondent itself, had only ‘compensative’ purposes with the consequence that the Claimant was still entitled to his monthly salaries as established in the first appendix. Moreover, in this respect, the Chamber also underlined that the Respondent’s argument concerning the unpaid leave granted to the Claimant could not be taken into account in light of the contradictory evidence produced.

24. Consequently, the DRC concluded that, even if it had taken said payments into account, there could not be satisfying proof that the Respondent had paid the Claimant in full prior to terminating the employment relationship with him.

25. Furthermore, and once again for the sake of completeness, the DRC took note of the documentation produced by the Respondent in order to prove that the amount of 2,893 in the currency of Country D for accommodation and daily meals established in the supplement to the contract was paid directly to the hotel “Hotel E”, which was where the Claimant allegedly stayed throughout the employment relationship. However, the Chamber agreed that, in light of the aforementioned considerations, said amount did not have any impact on the outstanding remuneration requested by the Claimant and, therefore, there was no need to enter into an analysis as to whether the produced documentation could be taken into account.

26. In light of all the above, and considering that the claimed outstanding dues were not contested by the Respondent with irrefutable evidence, the Chamber concluded that the Respondent is liable to pay to the Claimant outstanding remuneration in the amount of 244,250 in the currency of Country D.

27. In addition, taking into consideration his claim, the Chamber decided to award the Claimant interest at the rate of 5% p.a. as of the day following the day on which the Respondent terminated the employment contract.

28. In continuation and having established that the Respondent is to be held liable for the early termination of the employment contract without just cause, the Chamber decided that, taking into consideration art. 17 par. 1 of the Regulations, the Claimant is entitled to receive from the Respondent compensation for breach of contract in addition to the aforementioned outstanding remuneration.

29. In this context, the Chamber outlined that, in accordance with said provision, 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.

30. In application of the relevant provision, the Chamber held that it first of all had to clarify whether the pertinent employment contract contained any clause, by means of which the parties had beforehand agreed upon a 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 contract at the basis of the matter at stake.

31. 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. Bearing in mind the foregoing, the Chamber proceeded with the calculation of the monies payable to the Claimant under the terms of the employment contract as from its termination and concluded that the Claimant would have been entitled to receive 3,510,000 in the currency of Country D as remuneration had the employment contract been executed until its regular expiry date, i.e. 1 November 2016 (namely, 1,117,000 in the currency of Country D each for August, September and October 2016).

32. In continuation, the Chamber assessed 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 able to reduce his loss of income. According to the constant practice of the DRC, such remuneration under a new employment contract(s) 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.

33. In respect of the above, the Chamber recalled that the Claimant had not signed any other employment contract after the termination of the one at stake in the present matter, and therefore he was not able to mitigate his damages.

34. Consequently, on account of all of the above-mentioned considerations, the Chamber decided that the Respondent must pay the amount of 3,510,000 in the currency of Country D to the Claimant as compensation for breach of contract.

35. In addition, taking into account the Claimant’s request as well as the constant practice of the Dispute Resolution Chamber in this regard, 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 on which the claim was lodged, i.e. 11 September 2017, until the date of effective payment.

36. The Dispute Resolution Chamber concluded its deliberations in the present matter by establishing that any further claim lodged by the Claimant 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 244,250 in the currency of Country D, plus 5% interest p.a. as from 11 August 2016 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 3,510,000 in the currency of Country D, plus 5% interest p.a. as from 11 September 2017 until the date of effective payment.

4. In the event that the amounts plus interest 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 (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