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

Decision of the

Dispute Resolution Chamber

passed in Zurich, Switzerland, on 15 November 2018,

in the following composition:

Geoff Thompson (England), Chairman

Roy Vermeer (the Netherlands), member

Johan van Gaalen (South Africa), member

Wouter Lambrecht (Belgium), member

Pavel Pivovarov (Russia), member

on the matter between the player,

Player A, Country B

as Claimant / Counter-Respondent

and the club,

Club C, Country D

as Respondent / Counter-Claimant

and the club,

Club E, Country B

as Respondent II

regarding an employment-related dispute

arisen between the parties

I. Facts of the case

1. On 17 January 2014, the player of Country B, Player A, (hereinafter; the player) and the club of Country D, Club C (hereinafter; Club C) entered into an employment contract (hereinafter; the contract) valid as of 2 January 2014 until 1 January 2017.

2. According to the contract, the player was entitled to receive from Club C an “annual compensation” of USD 200,000 for the year 2014, USD 225,000 for the year 2015 and USD 250,000 for the year 2016. The “annual compensation” was payable in 11 equal instalments between February and December of each year.

3. Clause 3.7 of the contract reads as follows: “[the player] must notify [Club C] in advance when concluding a contract which gives the right to any kind of monetary or material benefit from third parties”.

4. Moreover, clause 4.7 of the contract states that “[Club C] club shall provide [the player], his wife and children (01) air ticket in business class for round trip City F/Country B to City G/Country D, to be used during season”.

5. Clause 7 of the contract provides that “if [the player] (…) fails to comply with or terminates this agreement, the contractual penalty shall be EUR 3,000,000”.

6. For its part, clause 8.4 of the contract states that “in case the player breaches any of [its obligations], the club will have the right to unilaterally terminate this agreement, and will be released from any outstanding compensation, as well as apply a penalty”.

7. On 16 January 2014, Club C, the player and the company “Company H” (hereinafter; the company) concluded an “Agreement of Temporary Assignment of Image Rights of Professional Football Athlete” (hereinafter; the image-rights agreement), whereby the company, which was the “sole holder” of the player’s image rights, assigned them to Club C on a temporary basis until 1 January 2017.

8. According to the image-rights agreement, Club C committed to pay to the company USD 200,000 for the year 2014, USD 225,000 for the year 2015 and USD 250,000 for the year 2016.

9. On 1 January 2015, Club C and the club of Country B, Club E (hereinafter; Club E) concluded an agreement for the temporary transfer of the player from Club C to Club E until 31 December 2015 (hereinafter; the loan agreement).

10. Clause 1.4 of the loan agreement reads, inter alia, as follows: “Club C must authorise in writing any sub-loan of the player (…) In the event of a sub-loan, the possible loan fee obtained will be due to Club C, as well as in the event the player receives a higher salary than paid by Club E, the difference must be subtracted from the amount paid by Club C to the player”.

11. According to clause 4 of the loan agreement, during the loan spell Club C committed to pay to the player an “annual salary” of USD 155,000 and Club E a monthly salary of currency of Country B (Currency of Country B) 15,000 (~USD 5,600).

12. On 3 September 2015, Club C authorised Club E to sub-loan the player to another club of Country B, Club J.

13. On 8 January 2016, the player sent a letter to Club C requesting for the latter to “send my flight ticket Country B – Country D so I can present myself to work”.

14. On 20 January 2016, the player addressed a second letter to Club C requesting that Club C i) provides the precise date and place where he needs to report, ii) provides the “necessary business class tickets” and iii) to immediately “ask for the return” of the player’s ITC as well as to register him for the upcoming season.

15. On 23 January 2016, Club C replied to the player informing him that “We would like to request you to return to Club C by Jan 30th 2016 and stay [at a] hotel in the city (…) Also visa, flight ticket, and hotel room would be provided soon”.

16. On 1 February 2016, Club C sent a further letter to the player requesting him to clarify whether he had concluded any agreement with Club E, Club J or any other third party related to “the exploitation of his image rights” during the loan spell. In the affirmative, Club C requested the player to provide it with a copy thereof. A similar request was sent on 3 February.

17. On 3 February 2016, the player replied to Club C, inter alia, in the following terms: i) he emphasised that the temporary assignment of his image-rights to Club C was non-exclusive and ii) he stressed that “any eventual agreements” concluded between him and “the clubs to which he has provided services” are confidential and therefore he “is not comfortable to show any document”. On this same date, the player went back to Country D.

18. On 5 and 10 February 2016, further correspondence in this same sense was exchanged between the parties.

19. On 16 February 2016, Club C notified to the player the unilateral termination of the contract. In particular, after briefly recalling the exchange of correspondence, Club C informed the player that “it has been brought to [its] attention (…) that you have signed an agreement to assign your image rights to [Club J] for a fixed monthly remuneration in addition to the monthly salary of Currency of Country B 20,000” and that “There are suspicious [that] you also received additional remuneration from Club E and/or third parties”. Club C further stated that, in spite of its multiple requests, the player failed to inform Club C about these alleged extra payments which constituted a “serious breach of confidence and good faith”. As such, Club C asserted that the termination of the contract was with just cause.

20. On 20 February 2017, the player lodged a claim against Club C in front of FIFA requesting USD 250,000 as compensation for breach of contract plus 5% interest as of “5 September 2015” as well as legal fees.

21. In particular, the player argued that Club C was no longer interested in his services for the 2016 season as it neither requested his return, until it was formally notified by the player, nor instructed “the return” of the player’s ITC. Moreover, according to the player, upon his return to Country D “he did not join the club’s first team” and instead Club C “created an unnecessary and unreasonable discussion about the player’s image rights…”.

22. In this respect, the player stated that i) he “himself” did not sign any agreement with Club C regarding his image rights, ii) the image rights contract was entered on a non-exclusive basis and iii) he was not forbidden to receive an “additional payment from Club E or Club J ”. As such, the player asserted that “he could receive any kind of payment from those clubs, such as bonuses of any nature”. In any case, the player emphasised that he “never received any additional payment from Club E or Club J regarding his image rights”.

23. In view of the foregoing, the player concluded that the termination of the contract by Club C was clearly without just cause.

24. In its reply to the claim, after recalling the above-described facts, Club C first stressed that “under the culture and law of Country D, the duties of trust, loyalty and good faith are vested of significant importance…”.

25. With the above in mind, Club C pointed out that the player committed several breaches of the employment contract which justified its termination. In particular, Club C argued that the player i) secretly received payments from Club E and Club J in breach of art. 3.7 of the contract (cf. point 3 above), ii) secretly received payments from Club E and Club J in breach of art. 1.4 of the loan agreement (cf. point 10 above) and iii) secretly negotiated employment contracts with Club J and the Club K without having a valid authorisation from Club C; this in breach of art. 18.3 of the FIFA Regulations.

26. To elaborate further, Club C argued that while the player was registered on a sub-loan basis with Club J, it “discovered” that in addition to the annual salary that Club C was paying him, the player was receiving an additional monthly salary of currency of Country B 20,000 from Club J which is “a value higher than that paid by Club E and without the correspondent discount” as per art. 1.4 of the loan agreement.

27. Furthermore, Club C asserted that upon the player’s return to Country D, it learnt from “third parties” that the player had been receiving additional payments by Club E and Club J allegedly for the assignment of his image rights. As such, Club C stressed that it requested the player to provide every agreement that he signed with both Club E and Club J, however to no avail.

28. Consequently, Club C argued that the player breached art. 3.7 of the contract and 1.4 of the loan agreement. In this respect, according to Club C, the player’s representative implicitly acknowledged the existence of further agreements (cf. point 17 above).

29. What is more, according to Club C, the player breached art. 18.3 of the Regulations as, whilst on loan with Club J , it started negotiating with the latter the extension of their contract beyond the loan spell “behind Club C’s back”. In this regard, Club C enclosed press releases where the player is quoted reportedly stating that “If it were up to me, I would do everything I could do stay”. In the same vein, Club C pointed out that, irrespective of the fact that the player eventually went back to Country D, it is clear that it was never his true intention to render his services to Club C ever again. Therefore, according to Club C, all the player’s default letters sent during January 2016 were just a simulation in order to try to prove an alleged breach of contract committed by Club C.

30. In view of the foregoing, Club C asserted that the player’s behaviour “show bad faith (…) in particular under standards of Country D”.

31. On account of all the aforementioned considerations, Club C stressed that it had just cause to terminate the contract with the player due to a severe breach of trust and hence lodged a counter-claim against him.

32. Particularly, Club C first referred to clause 7 of the contract (cf. point 5 above). However, “in the event FIFA should consider such a clause disproportionate”, Club C stressed that art. 17 of the Regulations should apply. Club C further requested for Club E to be declared as jointly and severally liable of any compensation due by the player.

33. Furthermore, Club C claimed the “reimbursement” of USD 5,093.22. Club C calculated this amount considering clause 1.4 of the loan agreement in connection with the salary of currency of Country B 20,000 that the player earned with Club J as of September until December 2015 (cf. point 10 above).

34. In his replica, the player reiterated the arguments of its reply.

35. Moreover, the player denied that he ever received any amounts from Club E or Club J besides his salary. In this regard, the player stressed that Club C did not provide any evidence which could demonstrate its allegation.

36. The player argued that it did not comply with the request of Club C to provide it with his contracts as these were confidential and, in doing so, he would have been in breach of contract. In any case, the player underscored that the amounts that he earned with Club E and Club J are exactly those stated by Club C which therefore was perfectly aware how much the player was going to receive whilst on loan. As such, the player stressed that there is no possibility of him having breached art. 3.7 of the contract.

37. The player further claimed that in accordance with the Regulations of the Football Association of Country D, clubs are only allowed to register 3 foreign players which Club C had already done. As such, Club C allegedly “had no place to register the player (…) for the 2016 season”.

38. For its part, in its reply to the counterclaim, Club E stressed that “seems to be very weak [to] pretend to apply a just cause (…) based on website publications”.

39. Furthermore, Club E emphasised that the only amount that it paid to the player during the loan spell was his monthly salary of currency of Country B 15,000. Club E claimed that “[it] never existed any other kind pf payment from Club E” to the player.

40. In its duplica, Club C reiterated the arguments of its reply.

41. Upon FIFA’s request, the player informed FIFA that he concluded two new employment contracts in Country B. The first one with Club E valid as of 15 March 2016 and according to which he was entitled to a monthly salary of currency of Country B 1,000 and the second one with the Club L valid as of 22 April 2016 until 31 December 2016 which provided a monthly salary of currency of Country B 2,500.

II. Considerations of the Dispute Resolution Chamber

1. First, the Dispute Resolution Chamber (hereinafter also referred to as the DRC or the Chamber) analysed whether it was competent to deal with the matter at stake. In this respect, it took note that the present matter was submitted to FIFA on 20 February 2017. Consequently, the 2017 edition of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (hereinafter: the Procedural Rules) is applicable to the matter at hand (cf. art. 21 of the Procedural Rules).

2. Subsequently, the members of the Chamber referred to art. 3 par. 1 of the Procedural Rules and confirmed that in accordance with art. 24 par. 1 in combination with art. 22 lit. b) of the Regulations on the Status and Transfer of Players (edition 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, a club of Country D and a club of Country B.

3. Furthermore, the Chamber 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 Chamber confirmed that in accordance with art. 26 par. 1 and 2 of the Regulations on the Status and Transfer of Players (edition 2018), and considering that the Claimant’s claim was lodged on 26 December 2016, the 2016 edition of the aforementioned 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, and entering into the substance of the matter, the Chamber started by acknowledging the above-mentioned facts 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 so doing, the members of the Chamber first noted that Club C and the player concluded an employment contract valid for 3 years, as of 2 January 2014 until 1 January 2017. Equally, the DRC took note that, during the second year of the contract, the player was loaned to Club E and then sub-loaned to Club J and that, thereupon, the player returned to Country D in February 2016.

6. Subsequently, the Chamber acknowledged that on 16 February 2016, Club C decided to unilaterally terminate the contract with the player due to an alleged “serious breach of confidence and good faith”. In particular, the DRC took note that, according to Club C, the player breached clauses 3.7 of the contract and 1.4 of the loan agreement.

7. The members of the Chamber then took note of the player’s claim who argues that the termination of the contract by Club C was without just cause. Particularly, the Chamber observed that the player denied having concluded any image rights agreements neither with Club E nor Club J and affirmed that the only amounts he received from said clubs were connected to his employment contracts. As such, the player denied the allegations of Club C.

8. The player argued in that regard that Club C failed to present any evidence in support of its position.

9. The members of the Chamber took note that, conversely, Club C insisted that the player breached clauses 3.7 of the contract and 1.4 of the loan agreement by not informing it about certain image rights agreements that the player reportedly concluded with Club E and Club J, in spite of having been obliged to do so. Club C stressed that it learnt from third parties that the player had indeed signed an agreement related to his image rights with the clubs of Country B. According to Club C, the player’s representative implicitly acknowledged the existence of said agreements by means of his letter of 3 February 2016.

10. As such, according to Club C, it had just cause to terminate the contract on 16 February 2016.

11. On account of all the above, the Chamber highlighted that the underlying dispute in the present matter, considering the conflicting positions of the parties, was to determine whether the employment contract had been prematurely and unilaterally terminated with or without just cause by Club C. In so doing, the Chamber proceeded with an analysis of the circumstances surrounding the present matter, the parties’ arguments as well the documentation on file, 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.

12. The members of the Chamber equally deemed appropriate to remark the general principle that contracts ought to be respected, as otherwise, consequences have to be assumed by the relevant party. Further, the DRC took into consideration the content of art. 14 of the Regulations, which provides that “a contract may be terminated by either party without consequences of any kind (either payment of compensation or imposition of sporting sanctions) where there is just cause”.

13. The Chamber stressed that the definition of just cause and whether just cause exists shall be established in accordance with the merits of each particular case.

14. Furthermore, the Chamber recalled its longstanding and well established jurisprudence which indicates that only a breach or misconduct which is of a certain severity justifies the termination of a contract. In other words, only when there are objective criteria which do not reasonably permit to expect a continuation of the employment relationship between the parties, a contract may be terminated prematurely. Hence, if there are more lenient measures which can be taken in order for an employer to ensure the employee’s fulfilment of his contractual duties, and vice versa, such measures must be taken before terminating an employment contract. A premature termination of an employment contract can only ever be an ultima ratio measure.

15. With the above-mentioned principles in mind, the Chamber first stressed that, even if it could transpire from clause 3.7 of the contract that, indeed, the player was obliged to inform Club C about “any kind of monetary or material benefit from third parties”, there is no evidence on file that the player ever concluded an image rights agreement with any of the clubs of Country B. What is more, Club E explicitly denied having ever concluded a contract with the player other than the employment contract.

16. Put differently, the Chamber pointed out that Club C did not provide evidence which could prove, to the DRC’s satisfaction, that the player was in material breach of the contract at the moment of its early termination by Club C. In this respect, even if it could be established that the player failed to inform Club C that it was earning currency of Country B 20,000 in accordance with his contract with Club J, this, at most, can be seen as a minor disrespect of an obligation of the player contained in the loan agreement; however it clearly cannot be considered as a material breach of contract which would warrant its unilateral termination.

17. In the opinion of the Chamber, in line with the principles described above, there were other measures at Club C’s disposal in case it deemed that the player had disrespected the contract, for example, without limitation, some kind of disciplinary measure. The Chamber highlighted therefore that, at the moment of the termination of the contract, there were no objective criteria which could not have reasonably permit the continuation of the contractual relationship.

18. In view of all the foregoing, the members of the DRC unanimously concluded that Club C terminated the contract without just cause and should therefore bear the consequences of such unjustified termination.

19. Prior to analysing the consequences of Club C’s termination of the contract without just cause, the members of the Chamber wished to address Club C’s claim for reimbursement in the amount of USD 5,093.22.

20. The members of the Chamber noted that according to clause 1.4 of the loan agreement “In the event of a sub-loan, the possible loan fee obtained will be due to Club C, as well as in the event the player receives a higher salary than paid by Club E, the difference must be subtracted from the amount paid by Club C to the player”.

21. he Chamber considered the above-mentioned clause clear and unambiguous. If, deriving from a sub-loan, the player was to earn from any third club a salary higher than the one he was receiving from Club E, the difference between the player’s salaries should be deducted from the amounts paid by Club C.

22. In this context, it remained undisputed that the player was receiving a salary from Club E of currency of Country B 15,000 and of currency of Country B 20,000 with Club J. Therefore, in view of the clear content of clause 1.4 of the loan agreement, the DRC considered that the player should reimburse to Club C the amount of currency of Country B 20,000, namely the difference of both salaries, i.e. currency of Country B 5,000 as of September until December 2016. Along these lines, the Chamber pointed out that the player did not challenge the exchange rate to USD dollars presented by Club C which, in the DRC’s view, appears to be accurate. As such, the player should reimburse the amount of USD 5,093.22 to Club C.

23. Having established the above, and reverting to the consequences of the termination of the contract without just cause, the Chamber decided that, taking into consideration art. 17 par. 1 of the Regulations, the player is entitled to receive from Club C compensation for breach of contract.

24. The Chamber turned to the calculation of the amount of compensation payable to the player by Club C in the case at stake. In doing so, the members of the Chamber firstly recapitulated that, in accordance with art. 17 par. 1 of the Regulations, 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 player 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.

25. In application of the relevant provision, the Chamber held that first of all, it had to clarify as to whether the pertinent employment contract contained a provision 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.

26. In this regard, the Chamber recapped that clause 7 of the contract stipulates the following: “if [the player] (…) fails to comply with or terminates this agreement, the contractual penalty shall be EUR 3,000,000”.

27. While analysing the aforementioned clause, the members of the Chamber noted that said clause provides for a scenario that did not occur, i.e. a breach of the contract by the player. As such, and in accordance with the longstanding jurisprudence of the DRC in this respect, the Chamber decided that the aforementioned clause cannot be taken into consideration in the determination of the amount of compensation due by Club C.

28. As a consequence, the members of the Chamber determined that the amount of compensation payable by Club C to the player had to be assessed in application of the other parameters set out in art. 17 par. 1 of the Regulations. The Chamber recalled that said provision provides for a non-exhaustive enumeration of criteria to be taken into consideration when calculating the amount of compensation payable.

29. Bearing in mind the foregoing as well as the claim of the player, the Chamber proceeded with the calculation of the monies payable to the player under the terms of the employment contract until its natural expiration. In particular, the Chamber concluded that the residual value of the contract amounts to USD 250,000 corresponding to the year 2016; amount which should serve as the basis for the determination of the amount of compensation for breach of contract.

30. In continuation, the Chamber verified as to whether the player had signed an employment contract with another club during the relevant period of time, by means of which he would have been enabled 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.

31. During the relevant period, the player entered into two new employment contracts. The first one with Club E valid as of 15 March 2016 and according to which he was entitled to a monthly salary of currency of Country B 1,000 and the second one with the Club L valid as of 22 April 2016 until 31 December 2016 which provided a monthly salary of currency of Country B 2,500. As such, the DRC concluded that the player had managed to mitigate his damages in the total amount of currency of Country B 23,500 amounting to approximately USD 6,800.

32. Consequently, on account of all of the above-mentioned considerations and the specificities of the case at hand, the DRC decided that the club must pay the player the amount of USD 243,200 which is to be considered a reasonable and justified amount of compensation for breach of contract in the matter at hand. Equally, the Chamber decided to grant interest on said amount of 5% p.a. as of the date of the claim, as per the player’s request and the DRC’s constant practice in this regard.

33. The members of the Chamber concluded their deliberations by rejecting any further claim lodged by the parties.

III. Decision of the Dispute Resolution Chamber

1. The claim of the Claimant/Counter-Respondent, Player A, is partially accepted.

2. The Respondent/Counter-Claimant, Club C, is ordered to pay to the Claimant/Counter-Respondent, within 30 days as from the date of notification of this decision, compensation for breach of contract in the amount of USD 243,200 plus 5% interest p.a. as of 20 February 2017 until the date of effective payment.

3. In the event that the amount plus interest due to the Claimant/Counter-Respondent in accordance with the above-mentioned number 2. is not paid by the Respondent/Counter-Claimant within the stated time limit, the present matter shall be submitted, upon request, to the FIFA Disciplinary Committee for consideration and a formal decision.

4. The counterclaim of the Respondent/Counter-Claimant is partially accepted.

5. The Claimant/Counter-Respondent is ordered to pay to the Respondent/Counter-Claimant, within 30 days as from the date of notification of this decision, the amount of USD 5,093.22.

6. In the event that the amount due to the Respondent/Counter-Claimant in accordance with the above-mentioned number 5. is not paid by the Claimant/Counter-Respondent within the stated time limit, interest at the rate of 5% p.a. will fall due as of expiry of the aforementioned time limit and the present matter shall be submitted, upon request, to the FIFA Disciplinary Committee for consideration and a formal decision.

7. Any further claim lodged by the parties is rejected.

8. The parties are directed to inform each other, 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

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