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 June 2019

Decision of the

Dispute Resolution Chamber

passed in Zurich, Switzerland, on 14 June 2019,

in the following composition:

Geoff Thompson (England), Chairman

Wouter Lambrecht (Belgium), member

Tomislav Kasalo (Croatia), 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 26 August 2016, 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) with the Respondent, valid as from 1 August 2016 until 30 June 2018.

2. In accordance with clauses 1 and 2 of the contract, the Claimant was entitled to the following remuneration:

a) as from 1 September 2016 until 31 July 2017: a “gross” monthly salary of currency of Country D (currency of Country D) 60,000 and a “gross” image rights fee of currency of Country D 500,000 payable in two instalments of currency of Country D 250,000 each, on August 2016 and December 2016;

b) as from 1 August 2017 until 30 June 2018: a “gross” monthly salary of currency of Country D 65,000 and a “gross” image rights fee of currency of Country D 550,000 payable in two instalments of currency of Country D 275,000 each on August 2017 and December 2017.

3. On 27 January 2017, the Claimant and the Respondent signed a mutual termination agreement (hereinafter: the agreement) to put an end to their contractual relationship.

4. At lit. B, the preamble of the agreement provides that “the [Respondent] and the [Claimant] desire to terminate the Contract and to settle amicably and discharge all disputes and claims between them or may arise between them, by reason of any matter, cause, or act, related to or arising from the Contract from the date of signature to the execution of this Mutual Termination Agreement”.

5. Clause 1 of the agreement establishes that “The Parties by mutual agreement do hereby terminate the Contract and the Parties will have no further obligations to each other pursuant to the Contract after the conditions of the abovementioned paragraph C have been met”.

6. Moreover, the agreement provides in the lit. C of the preamble that the parties agreed on a “settlement amount” of currency of Country D 500,000 to be paid to the Claimant as follows: “1. From January to June 2017, the [Claimant] will be paid his normal salary of currency of Country D 60,000 (sixty thousand currency of Country D) gross from the settlement amount; and 2. On or before 31 July 2017, the [Claimant] will be paid the balance of the settlement amount”.

7. Clause 3 of the agreement further states: “This Agreement and all matters of which it disposes, shall be in full and final settlement of all claims whatsoever nature the parties may presently have pursuant to the employment of the [Claimant] by the [Respondent] or its termination, and whether arising in contract, fairness, delict, statute or otherwise. In particular, the [Claimant] shall not have any claim against the [Respondent] arising out of any alleged unfair dismissal or unfair termination of employment, or unfair labour practice, in terms of the Labour Relations Act 66 of 1995”.

8. Pursuant to the agreement signed on 27 January 2017, the Claimant acknowledged having received from the Respondent the approximate amount of currency of Country D 42,600 per month as from January until June 2017.

9. In this regard, the Claimant contacted the Respondent requesting explanations as to the monthly deductions of currency of Country D 17,400 made by the latter. The Respondent replied to the Claimant invoking taxes deductions in Country D.

10. On 19 September 2017, the Claimant sent a default notice to the Respondent asking to be paid within 10 days the amount of currency of Country D 248,000, corresponding to the balance of the settlement amount.

11. On 4 April 2018, the Claimant lodged a claim for breach of contract and requested the payment of the amount of currency of Country D 1,603,200, plus 5% interest p.a. in case the Respondent fails to pay the amount within 30 days after the notification of the decision, broken-down as follows:

a. currency of Country D 278,200 as outstanding remuneration made up as follows: 1. currency of Country D 125,000 corresponding to the remainder of the image rights fee for the 2016/2017 season; 2. currency of Country D 153,200 corresponding to the “unjustified” monthly salaries deductions (i) as from September 2016 until December 2016 (i.e. currency of Country D 12,200 deducted per month) and (ii) as from January 2017 until June 2017 (i.e. currency of Country D 17,400 deducted per month);

b. currency of Country D 1,325,000 as compensation for breach of contract made up as follows: (i) currency of Country D 550,000 corresponding to the image rights fee for the 2017/18 season; (ii) currency of Country D 60,000 corresponding to the July 2017 monthly salary; (iii) currency of Country D 715,000 corresponding to the monthly salaries of currency of Country D 65,000 each as of August 2017 until September 2018.

13. More specifically, the Claimant acknowledged having only received the approximate amount of currency of Country D 252,000 out of currency of Country D 500,000 and argued that the Respondent did not fulfill its financial obligations in accordance with the provisions of the agreement. As such, the Claimant considered that it shall be deemed that the contract had never been mutually terminated between the parties in accordance with “paragraph C” of the said agreement.

14. In its reply, the Respondent acknowledged having an outstanding debt towards the Claimant but disagreed on the amount due. In fact, the Respondent underlined that the amount provided by the agreement is a gross amount, reason why it made some deductions.

15. In light of the foregoing, the Respondent acknowledged that the amount of currency of Country D 140,000 was due to the Claimant, corresponding to the balance of the settlement amount as provided by lit. C of the preamble of the agreement.

16. In his replica, the Claimant first argued that the social deductions made by the Respondent are unlawful since the amounts provided by the agreement could only be net as they represent compensation and not salaries.

17. In addition, the Claimant pointed out that, as he left Country D after having signed the agreement, no taxes were applicable since he was not resident in the country anymore.

18. Furthermore, the Claimant stressed that the Respondent could not invoke the application of the agreement as the latter did not fulfil its obligations. In this respect, the Claimant reiterated his argument that the contract had never been terminated.

19. Finally, in view of the Respondent’s submission related to the deductions made on the monthly salaries as from January 2017 until June 2017 (i.e. in total currency of Country D 104,144.14), the Claimant amended his claim reducing his requests to the amount of currency of Country D 1,598,144.

20. In its duplica, the Respondent first reiterated that it was willing to pay to the Claimant, upon receipt of his bank details, the amount of currency of Country D 140,000, minus the applicable taxes, allegedly corresponding to the balance of the settlement amount agreed.

21. What is more, the Respondent argued that the employment relationship ceased upon the signing of the agreement, i.e. on 27 January 2017. In this regard, the Respondent underlined that said agreement superseded the contract, which, in fact, is “unenforceable”.

22. In addition, the Respondent rejected the Claimant’s arguments considering that he failed to prove that “the employment relationship remained valid after the Termination Agreement was signed”.

23. As regards the tax deductions, the Respondent stressed that, as indicated in the agreement, the settlement amount payable was gross.

24. Moreover, the Respondent rejected the Claimant’s argument as to the fact that he was not resident in Country D anymore. In fact, the Respondent alleged that, in any case, it was still obliged to deduct taxes on the relevant payments according to the law, as the source of the income was in Country D.

II. Considerations of the Dispute Resolution Chamber

1. First of all, the Chamber pointed out that, contrary to the information contained in FIFA’s letter dated 11 June 2019, by means of which the parties were informed of the composition of the Chamber, the member X could not participate in the deliberations in the case at hand, due to unforeseen personal circumstances and that, in order to comply with the prerequisite of equal representation of club and player representatives, also the member XX refrained from participating and, thus, the Dispute Resolution Chamber adjudicated the case in presence of three members.

2. Its composition having been defined, 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 4 April 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).

3. 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 and 2 in combination with art. 22 lit. b) of the Regulations on the Status and Transfer of Players (edition June 2019), 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.

4. 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 the said Regulations (edition June 2019) and considering that the present claim was lodged in front of FIFA on 4 April 2018, the 2018 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.

5. 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.

6. In this respect, the DRC acknowledged that, on 26 August 2016, the Claimant and the Respondent concluded an employment contract valid as from 1 August 2016 until 30 June 2018, pursuant to which the Respondent undertook to pay to the Claimant, for the first season, a monthly salary of currency of Country D (currency of Country D) 60,000 as well as currency of Country D 500,000 as image rights fee and, for the second season, a monthly salary of currency of Country D 65,000 as well as currency of Country D 550,000 as image rights fee.

7. Moreover, the DRC took note that, on 27 January 2017, the parties signed a termination agreement, pursuant to which they established, inter alia, that “by mutual agreement do hereby terminate the Contract and the Parties will have no further obligations to each other pursuant to the Contract after the conditions of the abovementioned paragraph C have been met”.

8. Moreover, the Chamber took note that the termination agreement provided for a “settlement amount” of currency of Country D 500,000 to be paid to the Claimant as follows: “1. From January to June 2017, the [Claimant] will be paid his normal salary of currency of Country D 60,000 (sixty thousand currency of Country D) gross from the settlement amount; and 2. On or before 31 July 2017, the [Claimant] will be paid the balance of the settlement amount”.

9. In continuation, the members of the Chamber observed that, according to the Claimant, since the Respondent had not complied with the financial obligations enshrined in the termination agreement, pursuant to its Clause 1 the original employment contract had to be considered as never mutually terminated by the parties.

10. The DRC took note that, as a consequence of the above, the Claimant ultimately maintained that he was entitled to the total amount of currency of Country D 1,598,144 plus 5% interest p.a. deriving from the Respondent’s alleged breach of the original employment contract.

11. In continuation, the Chamber took note that the Respondent, for its part, maintained that the original employment contract had to be deemed unenforceable due to the signing of the termination agreement which superseded its efficacy. Moreover, the DRC observed that the Respondent acknowledged having a debt in the amount of currency of Country D 140,000 towards the Claimant and explained having applied monthly deductions of currency of Country D 17,400 to the Claimant’s entitlements deriving from the termination agreement due to reasons allegedly connected with tax of Country D legislation.

12. The foregoing having been said, the Chamber highlighted that the underlying issue in this dispute was to first establish whether at the basis of the claim was the original employment contract or the termination agreement and, subsequently, to determine the financial consequences in relation to the parties’ stance.

13. In respect of the above, and considering the Claimant’s argumentation, the members of the DRC turned their attention to Clause 1 of the termination agreement and determined that nowhere therein can be retrieved a clear and unequivocal provision establishing that, in case the Respondent did not comply with its obligations, the employment contract would revive and the Claimant be consequently entitled to claim financial dues on its basis.

14. Consequently, the DRC dismissed the Claimant’s argument in that regard and concluded that the only document to be taken into account as the basis of the present dispute defining the contractual relationship between the parties is the termination agreement dated 27 January 2017.

15. Having said that, the DRC observed that it remained uncontested that, out of the financial entitlements enshrined in the termination agreement, currency of Country D 140,000 had not been paid to the Claimant.

16. With regards to the monthly deductions of currency of Country D 17,400 applied by the Respondent to the Claimant’s entitlements, the members of the Chamber, bearing in mind art. 12 par. 3 of the Procedural Rules, in accordance with which any party claiming a right on the basis of an alleged fact shall carry the burden of proof, observed that the Respondent did not provide sufficient evidence that the aforementioned deductions were justified in light of Country Dn tax legislation.

17. On account of the above, the DRC concluded that, apart from the amount of currency of Country D 140,000 that had remained undisputedly outstanding, the Respondent had unlawfully deducted the amount of currency of Country D 104,144 from the Claimant’s entitlements set forth in the termination agreement signed between the parties on 27 January 2017, therefore failing to fulfil its financial obligations for a total amount of currency of Country D 244,144.

18. On account of the above considerations, the DRC decided that, in accordance with the general legal principle of “pacta sunt servanda”, the Respondent is liable to pay the requested amount of currency of Country D 244,144 to the Claimant.

19. In addition, taking into account the Claimant’s claim, the Chamber decided to award the Claimant interest of 5% p.a. as from the day following the 30th day from the notification of the present decision, as requested.

20. 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 outstanding remuneration in the amount of currency of Country D (currency of Country D) 244,144, 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 above-mentioned 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 limits and the present matter shall be submitted, upon request, to the FIFA Disciplinary Committee for consideration and a formal decision.

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

5. 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.

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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 (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