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 11 April 2019

Decision of the

Dispute Resolution Chamber

passed in Zurich, Switzerland, on 11 April 2019,

in the following composition:

Geoff Thompson (England), Chairman

Alexandra Gómez (Uruguay), Member

Stefano Sartori (Italy), Member

Daan de Jong (Netherlands), Member

Muzammil bin Mohamed (Singapore), Member

on the claim presented by the player,

Player A, from country A

as Claimant

against the club,

Club B, from country B

as Respondent

regarding an employment-related dispute between the parties

I. Facts of the case

1. The Player A, from country A (hereinafter: the Claimant), and the Club B, from country B (hereinafter: the Respondent) entered into an employment contract valid from 6 January 2016 until 31 May 2019.

2. According to art. 3 of the contract, the Claimant was entitled to receive for the season 2015/2016 a remuneration of EUR 140,000 paid in 5 monthly arrears of EUR 28,000 starting on 25 January 2016, along with a lump sum payment of EUR 100,000 to be paid “after [the Claimant] get professional football licence”.

3. In addition, art. 3 foresees that for the season 2016/2017 the Claimant would be entitled to receive a remuneration of EUR 285,000 paid in 10 monthly arrears of EUR 28,500 starting on 25 August 2016.

4. Moreover, art. 3 indicates that for the season 2017/2018 the Claimant would be entitled to receive a remuneration of EUR 350,000 paid in 10 monthly arrears of EUR 25,000 starting on 25 August 2017, along with a lump sum payment of EUR 100,000 to be paid “cash on 25.07.2017”.

5. Furthermore, art. 3 states that for the season 2018/2019 the Claimant would be entitled to receive a remuneration of EUR 350,000 paid in 10 monthly arrears of EUR 25,000 starting on 25 August 2017, along with a lump sum payment of EUR 100,000 to be paid “cash on 25.07.2018”.

6. On 30 October 2017, the Claimant sent a correspondence to the Respondent by means of which he declared, inter alia, that the Respondent had not paid part of the lump sum due on 25 July 2017 as well as three monthly salaries. Consequently, the Claimant put the Respondent in default and requested the amount of EUR 155,000 to be paid “within 10 days”.

7. On 3 November 2017, the Respondent sent to the Claimant a letter in which it stated that it had been delaying some payments to the Claimant due to “temporary financial problems” and that the situation would be regularised “in the shortest time possible”.

8. On 8 November and 27 November 2017, the Claimant sent two further letters to the Respondent, indicating, inter alia, that he had still not received the outstanding remunerations he claimed to be due in his letter dated 30 October 2017, and that an additional EUR 25,000 fell due in the meantime. The Claimant ordered the Respondent to process with the aforementioned payments otherwise he would “unilaterally terminate his contract”.

9. On 11 December 2017, the Claimant sent to the Respondent a correspondence by means of which he, inter alia, informed the latter of the unilateral termination of the contract with immediate effect.

10. On 14 December 2017, the Claimant lodged a claim against the Respondent in front of FIFA, arguing that since July 2017 the Respondent had repeatedly not complied with its financial obligations set out in the contract it signed with the player on 6 January 2016, thus leading him to terminate the contract with just cause on 11 December 2017, and requested the following to be awarded:

(a) The payment of EUR 180,000 of overdue payables, amounting to:

- EUR 80,000 representing the alleged remainder of the payment due on 25 July 2017;

- The salaries for August, September, October and November 2017, i.e. EUR 25,000 x 4 = EUR 100,000;

(b) The payment of EUR 500,000 corresponding to the residual value of the contract that was unilaterally terminated by the Claimant, that is to say salaries from December 2017 until May 2019, i.e. EUR 25,000 x 16 = EUR 400,000 and the lump sum payment of EUR 100,000 that was due on 25 July 2018;

(c) The payment of 5% interest from the due date of the overdue payables claims and from 11 December 2017 for the total amount claimed as residual value of the contract.

11. In its reply to the claim, the Respondent started by alleging that the Claimant had not been performing well between January 2016 and May 2016, and was subsequently loaned out to another country B club, Club C, where he apparently “could not show the expected performance”.

12. As to the substance, the Respondent is of the opinion that the claim of the Claimant should be rejected on the basis that he terminated his contract without just cause.

13. In fact, the Respondent indicated that it had apparently been facing some “temporary financial difficulties” which caused payments to players to be delayed, and that the Claimant used this situation to terminate the contract and claim compensation. The Respondent declared that “the main intention of the Player [was] to terminate his contract, sign a new contract with a new club in his country and receive compensation from [the Respondent]”. In addition, the Respondent mentioned that it did not receive the Claimant’s final warning dated 27 November 2017, and considers that the fact that the Claimant found a new club “only 18 days from his unilateral termination” denotes that he “did not act in good faith”.

14. Then, the Respondent stated that, in the event of the DRC holding that the Claimant had just cause to terminate the contract and that compensation is due, the compensation he claimed would be excessive and deductions should be applied.

15. In this respect, the Respondent first indicated that since terminating his contract, the Claimant had apparently entered into two further agreements with the Club D, from country A on 1 January 2018 and with the Club E, from country E on 5 July 2018, and argued that the remuneration received through these contracts shall be deducted from the calculation of compensation. In addition, the Respondent stated that the Claimant agreed to enter into these agreements of his own free will, and that should there be a negative difference between what he was meant to earn from the Respondent and what he earned with his new employers, the Respondent should not be held liable for said potential difference.

16. Then, the Respondent stated that an “equity deduction” should be additionally applied to the amount awarded as compensation, on the grounds that by terminating his contract unilaterally the Claimant stopped providing services to the Respondent and that as such “it will be unfair that he will receive the residual amount of his contract as compensation”.

17. The player informed FIFA that on 1 January 2018, the Claimant and the Club D, from country A entered into an employment contract valid from 1 January 2018 until 1 January 2020, according to which he would be entitled to receive a monthly fixed remuneration of EUR 2,300.

18. The player further informed FIFA that on 5 July 2018, the Claimant and the Club E, from country E entered into an employment contract valid from 5 July 2018 until 5 July 2019, according to which he would be entitled to receive a monthly fixed remuneration of EUR 2,000, along with a lump sum of EUR 10,000 due in July 2018 and a lump sum of EUR 5,000 due in January 2019.

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 case at hand. In this respect, it took note that the present matter was submitted to FIFA on 14 December 2017. Consequently, the 2017 edition of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (hereinafter: Procedural Rules) are applicable to the matter at hand (cf. article 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 DRC is competent to deal with the matter at stake, which concerns an employment-related dispute with an international dimension between a Player from country A and a club from country B.

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 14 December 2017, the 2016 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. The members of the Chamber started by acknowledging the facts of the case, as well as the documentation contained in the file. 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 Chamber first acknowledged that the Claimant and the Respondent signed an employment contract valid as from 6 January 2016 until 31 May 2019. In this respect, the Chamber observed that according to art. 3 of the contract, the Claimant was entitled to receive (1) a remuneration of EUR 140,000 for the season 2015/2016, paid in 5 monthly arrears of EUR 28,000 starting on 25 January 2016, along with a lump sum payment of EUR 100,000 to be paid “after [the player] get professional football licence”; (2) a remuneration of EUR 285,000 for the season 2016/2017, paid in 10 monthly arrears of EUR 28,500 starting on 25 August 2016; (3) a remuneration of EUR 350,000 for the season 2017/2018, paid in 10 monthly arrears of EUR 25,000 starting on 25 August 2017, along with a lump sum payment of EUR 100,000 to be paid “cash on 25.07.2017”, and (4) a remuneration of EUR 350,000 for the season 2018/2019 paid in 10 monthly arrears of EUR 25,000 starting on 25 August 2017, along with a lump sum payment of EUR 100,000 to be paid “cash on 25.07.2018”.

6. In continuation, the DRC noted that the Claimant lodged a claim against the Respondent arguing that he had terminated the employment contract with just cause on 11 December 2017 invoking that the Respondent had not complied with its financial obligations, namely the full payment of a signing-on fee as well as 4 monthly salaries, and this despite having been put in default on several occasions prior to the termination.

7. The Chamber observed that as a consequence the Claimant asked to be awarded the aforementioned outstanding dues along with the payment of compensation for breach of the employment contract.

8. In this respect, the Claimant requested to be awarded EUR 180,000 as outstanding remuneration plus interest, corresponding to EUR 80,000 as the remainder of the signing-on fee, and EUR 100,000 representing the salaries of August, September, October and November 2017.

9. The Claimant further requested the amount of EUR 500,000 plus interest, as compensation for breach of contract, corresponding, according to the Claimant, to the residual value of the contract as from the termination until 31 May 2019.

10. The Chamber took note of the argumentation of the Respondent which held that the Claimant took advantage of its “temporary financial difficulties”, which caused delays in remunerating the Claimant, in order to terminate the contract and claim compensation.

11. Having paid particular attention to the arguments of the parties, the DRC first took into account that at no point during the proceedings the Respondent denied that the remunerations referred to by the Claimant in his default notices and his claim had remained outstanding. The Chamber agreed that the main reason put forward by the Respondent in its defence, namely the club’s financial hardship, cannot be considered a valid reason to justify the outstanding payments.

12. Then, the DRC vigorously highlighted that the Respondent had not remedied the default in payments in spite of having been given the opportunity by the Claimant to do so in at least two occasions. Furthermore, the Chamber duly noted that on the date of the termination of the contract, i.e. 11 December 2017, four monthly salaries and the most part of a lump-sum fee remained outstanding, for a total amount of EUR 180,000.

13. Consequently, in view of the foregoing and in line with the DRC’s longstanding jurisprudence in this respect, the Chamber concluded that the Claimant had just cause to unilaterally terminate the contract and that, as a result, the Respondent is to be held liable for the early termination of the employment contract.

14. Bearing in mind the previous considerations, the Chamber turned its attention to the consequences of the early termination of the contract with just cause by the Claimant.

15. First of all, the DRC concurred that the Respondent must fulfil its obligations as per the employment contract up and until the date of termination of the contract in accordance with the general legal principle of “pacta sunt servanda”. Consequently, the DRC decided that the Respondent is liable to pay to the Claimant outstanding remuneration in the amount of EUR 180,000, consisting of four monthly salaries of EUR 25,000 each as from August until and including November 2017 as well as EUR 80,000 as the remainder of the lump-sum fee payable in July 2017.

16. In addition, taking into account the Claimant’s request, the Chamber decided that the Respondent must pay to the Claimant interest of 5% p.a. as of the respective due dates of the aforementioned sums until the date of effective payment.

17. Furthermore, the DRC 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.

18. In this context, the Chamber outlined that, in accordance with the 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.

19. In application of the relevant provision, the DRC 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 an amount of compensation payable by the contractual parties in the event of breach of contract. In this regard, the DRC established that no such compensation clause was included in the employment contract at the basis of the matter at stake.

20. 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 early termination until its regular date of expiry. In this respect, the DRC concluded that the remaining value of the contract as from its early termination until the regular expiry of the contract amounts to EUR 500,000 and that such amount shall serve as the basis for the final determination of the amount of compensation for breach of contract

21. In continuation, the Chamber verified 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 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.

22. Indeed, the Chamber took note that the Claimant signed two new employment contracts, with Club D on 1 January 2018 and with Club E on 5 July 2018 until 5 July 2019. According to these two agreements, the Claiamnt would be entitled to receive a total fixed remuneration of EUR 51,680 for the period 11 December 2017 – 31 May 2019.

23. Taking into account all the aforementioned elements as well as the specificities of the matter at hand, the DRC decided that the Respondent is liable to pay to the Claimant the amount of EUR 448,320 as compensation for breach of contract.

24. 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. 14 December 2017, until the date of effective payment.

25. The DRC concluded its deliberations in the present matter establishing that any further claim lodged by the Claimant was rejected.

*****

III. Decision of the Dispute Resolution Chamber

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

2. The Respondent, Club B, has to pay to the Claimant, within 30 days as from the date of notification of this decision, the amount of EUR 180,000 plus 5% interest p.a. as follows:

a. on the amount of EUR 80,000 as of 26 July 2017 until the date of effective payment;

b. on the amount of EUR 25,000 as of 26 August 2017 until the date of effective payment;

c. on the amount of EUR 25,000 as of 26 September 2017 until the date of effective payment;

d. on the amount of EUR 25,000 as of 26 October 2017 until the date of effective payment;

e. on the amount of EUR 25,000 as of 26 November 2017 until the date of effective payment.

3. The Respondent has to pay the Claimant, within 30 days as from the date of notification of this decision, compensation for breach of contract in the amount of EUR 448,320 plus 5% interest p.a. on said amount as from 14 December 2017 until the date of effective payment.

4. In the event that the amount due to the Claimant in accordance with the above-mentioned number 2. and 3. is 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 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 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:

Emilio García Silvero

Chief Legal Officer

Encl.: CAS directives