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 9 May 2019

Decision of the

Dispute Resolution Chamber

passed in Zurich, Switzerland, on 9 May 2019,

in the following composition:

Geoff Thompson (England), Chairman

Roy Vermeer (The Netherlands), member

Eirik Monsen (Norway), member

Pavel Pivovarov (Russia), member

Todd Durbin (USA), 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. After having negotiated in the period between 24 and 27 June 2018, on 28 June 2018, the Deputy Chairman (Mr EEE) of the Club of Country D, Club C (hereinafter: the Respondent), made a contract offer (hereinafter also referred to as: the offer or alleged employment contract) via e-mail to the agent (Mr FFF) of the Player of Country B, Player A (hereinafter: the Claimant), to conclude a contract for the period between 1 July 2018 and 30 June 2021, based on the following details:

For each of the seasons 2018/2019, 2019/2020 and 2020/2021:

 a yearly salary of EUR 85,000;

 12 monthly housing allowances of EUR 250 each;

 a salary raise of EUR 10,000 for the next season ‘in case the [Claimant] plays in 75% of the official League games (at least 45 minutes)’;

 a bonus of EUR 10,000 ‘in case the [Claimant] plays in 75% of the official League games (at least 45 minutes) and the [Respondent] qualifies through the Final League Table to UEFA Competitions’;

 a bonus of EUR 10,000 ‘in case the [Claimant] plays in 75% of the official League games (at least 45 minutes) and the wins the National Cup’;

 ‘one return ticket every season Country B-Country D’.

2. Furthermore, the proposal held the following clauses:

 ‘The offer is valid only if the [Claimant] is released from his previous club or his contract with his previous club expires on 30.6.2018 or he is officially on its transfer list for summer 2018.

 The [Claimant] and his agent must present and provide all necessary documents proving that he is released / free / out of contract from his previous club or an official document stamped and signed from his club that he is in its transfer list, naming exactly the person who Is authorized to negotiate with another club.

 The [Claimant] and his agent must present and provide to our club all necessary documents for FIFA TMS platform (Proof of last contract end date Document - TPO from former club Document) at the moment that the contracts will be signed.

 If the [Claimant] accepts our offer he is obliged to sign it and send it back along with a colour copy of his passport’.

3. On 8 July 2018, the Claimant put the Respondent in default, requesting the payment of the residual value of the contract in the amount of EUR 264,000 within 10 days.

4. On 9 August 2018, the Claimant lodged a claim before FIFA against the Respondent, claiming compensation for breach of contract in the total amount of EUR 308,000, consisting of:

 EUR 264,000, as compensation based on article 17 para. 1 lit. i) of the FIFA Regulations, corresponding to the residual value of the contract in the period between 1 July 2018 and 30 June 2021, namely a yearly salary of EUR 85,000 and a yearly housing allowance of EUR 3,000;

 EUR 44,000, as compensation based on article 17 para. 1 lit. ii) of the FIFA Regulations, as the ‘circumstances at stake are to be considered egregious’;

 5% interest p.a. on the amount of EUR 308,000 as from 28 June 2018.

5. In addition, the Claimant requested that sporting sanctions be imposed on the Respondent, as well as that the Respondent be held liable for the payment of legal and procedural costs.

6. More specifically, the Claimant explained that he accepted the Respondent’s proposal on 28 June 2018 by duly signing it. He further alleged that, on 29 June 2018, the Respondent, via its agent, requested him to arrive in City G, Country D on 2 July 2018. Moreover, the Claimant maintained that the Respondent requested his agent bank details and an invoice, in order to make the payment for the commission in connection with the transfer.

7. In addition, the Claimant recalled that, while he was on his way from Country B to Country D, the Respondent informed his agent that it had to ‘cancel the deal’, as it had received information that he only earned a yearly salary of EUR 40,000 at his previous Club of Country B and that therefore, it would no longer ‘agree to pay him EUR 80,000 per year’.

8. Moreover, after the Claimant had contacted the Respondent and informed it that the alleged circumstances did not constitute just cause for the termination of the contract, on 4 July 2018, the Sportive Director of the Respondent, Mr HHH, submitted an additional explanation as to the termination of the contract. According to him, the reasons for the termination of the contract were the contradictory information received as to the Claimant’s salary at his previous club, as well as the alleged fact that ‘it saw photo of the player in internet who makes with his hand the symbol of Country B’. According to Mr HHH ‘that’s so bad because we have lot of Players from Country J who is in the club and also Country B have inside places of Country K, Country D also, and fans get disappointed’.

9. In its reply to the claim, the Respondent explained that it had indeed made an offer to the agent of the Claimant, however that said offer was made under the assumption that the latter was earning a salary of EUR 80,000 at his previous Club of Country B, circumstance allegedly confirmed by the player and Mr HHH.

Based on this information, the Respondent offered the Claimant ‘a slightly higher’ salary of EUR 85,000 per year, in order to ‘attract his attention’.

10. In addition, the Respondent explained that the Claimant and his agent did not fulfill the second and third condition included as separate clauses in the offer (cf. supra point I.2), as they failed to deliver documentation proving that he could be signed out of contract from his previous club, as well as a ‘proof of last contract date and TPO from former club document’.

11. In continuation, the Respondent confirmed that it did no longer want to conclude the contract with the Claimant ‘as it felt deceived’ by him, due to the contradictory information received regarding his salary at his previous club. Furthermore, the Respondent pointed out that, already on 10 July 2018, the Claimant signed a new contract with the Club of Country B, Club L.

12. As to the substance, the Respondent argued that the offer signed on 28 June 2018 cannot be considered as a valid and binding employment contract, as it allegedly does not contain all the essentialia negotii, such as the role of the parties and the obligations of each of them. Furthermore, the Respondent stated that the offer was only valid as long as the 4 additional conditions included as separate clauses in the offer were met. As the Claimant never fulfilled these conditions, the Respondent concluded that it never signed a valid and binding contract with him.

13. Furthermore, the Respondent argued that – if the offer were to be considered as a valid and binding employment contract – the Respondent would have had a valid reason to withdraw it, as it had found out that the Claimant was not earning a yearly salary of EUR 80,000, but ‘received in fact half of that amount’, as a result of which the Respondent made him too high an offer and it felt ‘deceived’.

14. With regards to the requested compensation for breach of contract, the Respondent explained that only the salaries can possibly be taken into account, and not potential bonuses or housing allowances. Furthermore, the Respondent maintained that the fact that this matter is a potential breach of a pre-contract, as well as the fact that the player already found new employment, should be taken into account while calculating the potential compensation. As a result of the foregoing, the Respondent deemed that a compensation amounting to the salary for 9 days (the period between 1 July 2018 and 10 July 2018) and 2 months (the period deemed appropriate by the CAS Panel in the CAS Award XXX), i.e. the amount of EUR 19,550, would be appropriate in the matter at hand.

15. Despite being provided a deadline until 21 October 2018 to submit his replica as to the Respondent’s position, the Claimant did so only on 24 October 2018. Consequently, the FIFA Administration informed the Claimant that, as his replica was sent after the expiry of the deadline, the investigation phase of the matter at hand was closed.

16. After being requested to do so, the Claimant informed FIFA that, on an unspecified date in ‘late July 2018’, he signed a contract with the Club of Country B, Club L, valid for the football season 2018/2019, in turn of a total remuneration of EUR 50,000.

II. Considerations of the Dispute Resolution Chamber

1. First of all, the Dispute Resolution Chamber (hereinafter also referred to 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 9 August 2018. Consequently, the DRC concluded that the 2018 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 Dispute Resolution Chamber is competent to deal with the matter at stake, which concerns a dispute with an international dimension between an Player of Country B and a Club of Country D in relation to an alleged employment relationship between the parties.

3. Subsequently, 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 June 2018), and considering that the present claim was lodged on 9 August 2018, the June 2018 edition of said regulations (hereinafter: the 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. Subsequently, the DRC observed that the Claimant, in spite of having been invited to do so, had, for his part, failed to present his position in relation to the Respondent’s reply within the relevant time limit set by FIFA, i.e. 21 October 2018. In fact, the Claimant sent his replica only on 24 October 2018. As a result, bearing in mind its constant jurisprudence in this regard and in application of art. 9 par. 3 of the Procedural Rules, the Chamber decided not to take into account the Claimant’s replica and concluded that the FIFA Administration had rightfully proceeded to close the investigation phase.

6. Having said that, the members of the Chamber acknowledged that, according to the Claimant, by signing the Respondent’s offer on 28 June 2018, he had concluded an employment contract with the latter valid as from 1 July 2018 until 30 June 2021 and pursuant to which the Respondent had undertaken, inter alia, to pay him a yearly salary of EUR 85,000 and a yearly housing allowance of EUR 3,000 throughout the duration of the employment relationship.

7. Moreover, the members of the DRC took note that, according to the Claimant, the Respondent terminated the alleged employment contract without just cause on 1 July 2018, mainly referring to alleged false information the Claimant gave concerning his salary during the negotiation phase. Consequently, the DRC noted, the Claimant asked to be awarded compensation for breach of contract by the Respondent in the total amount of EUR 308,000.

8. On the other hand, the DRC noted that the Respondent, for its part, denied the conclusion of an employment contract with the Claimant. The Respondent admitted that it had carried out negotiations with the Claimant’s agent but that the document signed on 28 June 2018 could not be considered an employment contract, as it allegedly did not contain the essentialia negotii and since – in any case – the Claimant had failed to fulfil some of the conditions laid down therein.

9. Moreover, the Chamber observed that, the Respondent deemed that, should the said document be considered as an employment contract validly concluded and binding upon the parties, it had a valid reason to withdraw from it, mainly due to the fact that the Claimant had provided false information regarding his salary with his previous employer.

10. In light of the above, the members of the Chamber observed that the pivotal issue in this dispute, considering the diverging position of the parties, was to determine whether or not an employment contract had been concluded between the Claimant and the Respondent. The DRC further observed that, only if this was to be answered in the affirmative, it would be necessary to determine whether the contract had been terminated without just cause by the Respondent as maintained by the Claimant and, if so, to decide on the consequences thereof.

11. Against such background, the Chamber wished to highlight, first and foremost that, in order for an employment contract to be considered as valid and binding, apart from the signature of both the employer and the employee, it should contain the essentialia negotii of an employment contract, such as the parties to the contract, their role, the duration of the employment relationship and the remuneration. After a close look at the document presented by the Claimant, the members of the Chamber were satisfied with the conclusion that all such elements were included, given that said offer contained: i. a clear reference to the parties; ii. the parties’ acceptance of the conditions outlined therein, manifested through their respective signatures; iii. in particular, the obligation for the Claimant to render his services towards the Respondent in turn of a remuneration and iv. the duration of the employment relationship (i.e. as from 1 July 2018 until 30 June 2021). Moreover, the Chamber highlighted that the document also contained the Respondent’s seal and letterhead.

12. In this context, and mindful that an offer bearing all the above described components is tantamount to a contract with regards to the obligations arising among the parties that signed it, the DRC turned its attention to further circumstances emerged throughout the course of the proceedings.

13. First of all, the members of the DRC observed that the Respondent mentioned in its submission that the Claimant did not fulfil the second and third condition included as separate clauses in the offer (cf. supra point I.2.). In this respect, the Chamber considered relevant to recall art. 18 par. 4 of the Regulations as well as its jurisprudence in accordance with which the validity of an employment contract cannot be made conditional upon the execution of administrative formalities, such as, but not limited to, the registration of a contract on the TMS, which are of the sole responsibility of a club and on which a player has no influence.

14. Having stated the above, the DRC moved to the Respondent’s argument that the Claimant had provided deceiving information regarding his salary with his previous club and that said occurrence had justified a ‘withdrawal’ from the contract.

15. In this respect, the members of the Chamber were eager to emphasise that – even assuming that the Claimant had, willingly or not, misrepresented his salary situation at the time he was carrying out negotiations with the Respondent – such a circumstance cannot, by any means, be considered a valid reason in order for the Respondent not to fulfil the obligations contractually agreed.

16. Consequently, the DRC could not uphold the Respondent’s position in this respect, as it considered that it was too feeble an argumentation to justify, per se, the persuasion of not being bound anymore to an employment contract it had just concluded.

17. In light of all the aforementioned considerations, the members of the Chamber decided that the Respondent and the Claimant had validly concluded a contract and, thus, entered into a binding employment relationship by signing, on 28 June 2018, the recalled offer.

18. Consequently, the Chamber decided that the Respondent substantially refused to accept the Claimant’s services without any valid reason and, thus, is to be held liable for the early termination of the employment contract without just cause.

19. In continuation and having established the above, 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.

20. 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.

21. 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.

22. 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 EUR 264,000 as remuneration had the employment contract been executed until its regular expiry date, i.e. 30 June 2021.

23. In continuation, the Chamber assessed 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.

24. In respect of the above, the Chamber recalled that the Claimant signed an employment contract with the Club of Country B, Club L, valid for the football season 2018/2019, which – according to the information contained in the TMS – ran from 1 July 2018 until 30 June 2019, in turn of a total remuneration of EUR 50,000. Therefore, the DRC concluded that the Claimant was able to mitigate his damages during the relevant period for the amount of EUR 50,000.

25. Consequently, on account of all of the above-mentioned considerations, the Chamber decided that the Respondent must pay the amount of EUR 214,000 to the Claimant as compensation for breach of contract.

26. 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. 9 August 2018, until the date of effective payment.

27. In addition, as regards the claimed legal expenses, the DRC referred to art. 18 par. 4 of the Procedural Rules as well as to the longstanding and well-established jurisprudence of the Dispute Resolution Chamber, in accordance with which no procedural compensation shall be awarded in proceedings in front of the Dispute Resolution Chamber. Consequently, the Chamber decided to reject the Claimant’s request relating to legal expenses.

28. Moreover, the DRC decided to reject also the Claimant’s request for an additional compensation of EUR 44,000 based on art. 17 para. 1 lit. ii) of the Regulations. In this respect, the members of the Chamber deemed it worth to emphasise that – according to the recalled provision – the amount corresponding to three monthly salaries, which can be brought up to six in case of egregious circumstances, and which has to be added to the ‘Mitigated Compensation’, is expressly subject to the early termination of the contract being due to overdue payables. The members of the DRC observed that this was not the case at stake and, thus, concurred in rejecting the related request.

29. The Dispute Resolution Chamber concluded its deliberations in the present matter by establishing that any further claim lodged by the Claimant is rejected.

30. Furthermore, taking into account the consideration under number II./3. above, the Chamber referred to par. 1 and 2 of art. 24bis of the Regulations, which stipulate that, with its decision, the pertinent FIFA deciding body shall also rule on the consequences deriving from the failure of the concerned party to pay the relevant amounts of outstanding remuneration and/or compensation in due time.

31. In this regard, the Chamber pointed out that, against clubs, the consequence of the failure to pay the relevant amounts in due time shall consist of a ban from registering any new players, either nationally or internationally, up until the due amounts are paid and for the maximum duration of three entire and consecutive registration periods.

32. Therefore, bearing in mind the above, the DRC decided that, in the event that the Respondent does not pay the amounts due to the Claimant within 45 days as from the moment in which the Claimant, following the notification of the present decision, communicates the relevant bank details to the Respondent, a ban from registering any new players, either nationally or internationally, for the maximum duration of three entire and consecutive registration periods shall become effective on the Respondent in accordance with art. 24bis par. 2 and 4 of the Regulations.

33. Finally, the Chamber recalled that the above-mentioned ban will be lifted immediately and prior to its complete serving upon payment of the due amounts, in accordance with art. 24bis par. 3 of the Regulations.

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 compensation for breach of contract in the amount of EUR 214,000, plus 5% interest p.a. as of 9 August 2018 until the date of effective payment.

3. Any further claim lodged by the Claimant is rejected.

4. The Claimant is directed to inform the Respondent, immediately and directly, preferably to the e-mail address as indicated on the cover letter of the present decision, of the relevant bank account to which the Respondent must pay the amount mentioned under point 2. above.

5. The Respondent shall provide evidence of payment of the due amount in accordance with point 2. above to FIFA to the e-mail address psdfifa@fifa.org, duly translated, if need be, into one of the official FIFA languages (English, French, German, Spanish).

6. In the event that the amount due plus interest in accordance with point 2. above is not paid by the Respondent within 45 days as from the notification by the Claimant of the relevant bank details to the Respondent, the Respondent shall be banned from registering any new players, either nationally or internationally, up until the due amounts are paid and for the maximum duration of three entire and consecutive registration periods (cf. art. 24bis of the Regulations on the Status and Transfer of Players).

7. The ban mentioned in point 6. above will be lifted immediately and prior to its complete serving, once the due amounts are paid.

8. In the event that the aforementioned sum plus interest is still not paid by the end of the ban of three entire and consecutive registration periods, the present matter shall be submitted, upon request, to FIFA’s Disciplinary Committee for consideration and a formal decision.

*****

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:

Emilio García Silvero

Chief Legal & Compliance Officer

Encl.: CAS directives