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 24 August 2018

Decision of the

Dispute Resolution Chamber

passed in Zurich, Switzerland, on 24 August 2018,

in the following composition:

Geoff Thompson (England), Chairman

Johan van Gaalen (South Africa), member

Joaquim Evangelista (Portugal), member

Todd Durbin (USA), member

Stefano La Porta (Italy), 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. On 31 August 2016, the player of Country B, Player A (hereinafter: the player or Claimant) and the club of Country D, Club C (hereinafter: the club or Respondent) entered into an employment contract as well as a “supplement to the employment contract”, both valid as from 31 August 2016 until 30 June 2018. As per the contract, the player was entitled to a monthly salary of 15,000 in the currency of Country D (approx. EUR 207 on 31 August 2016) and, as per the supplement, to an additional monthly salary of EUR 49,795 and to an incentive remuneration of EUR 600,000, payable on 30 September 2016.

2. On 18 August 2017, the parties concluded an “agreement on cancellation of the employment contract” (hereinafter: the termination agreement).

3. According to paragraph 1 of the termination agreement, “the Parties have agreed to terminate the Employment Contract of August 31, 2016, (in edition of all appendices and additional agreements) by mutual consent between the Parties.”

4. In paragraph 2, the parties confirmed that “they have no financial or other claims to each other with regard to performance of the Employment Contract of August 31, 2016 except for the payments specified in para. 4 hereof.”

5. Paragraph 4 of the agreement stipulates the following:

“the Club shall pay to the Player a compensation for the early termination of the employment contract, the sum received on hands after a deduction of all taxes, the amount of 225,000 […] euro, in the period up to 01 January 2018 (inclusive).

The current debt to the football Player under the employment contract from 31.08.2016, in the amount of 84,000 […] euro, the sum received on hands after a deduction of all taxes, that the Club shall pay to the Player up to 01 September 2017 (inclusive)

[…]

In the case of non-payment of any above mentioned sums within the specified period, the Player is entitled and the Club pays the penalty in the amount of 1,700 […] euros for each day of delay without any other previous notification.”

6. Finally, paragraph 6 of the agreement stipulates the following:

“The payment shall be effected in euro in the account specified by the Player: Account E no: XXX, swift code (BIC) XXX”.

7. On 8 September 2017, the player put the club in default of payment of the amount of EUR 84,000, plus a penalty fee in the amount of EUR 11,900, for a delay of payment of 7 days.

8. On 18 September 2017, the player sent another default notice to the club, requesting it to pay the remaining EUR 21,745.79 and the penalty fee in the amount of EUR 18,700, for a delay of payment of 11 days.

9. On 3 October 2017, the player once again contacted the club, confirming the receipt of the amount of EUR 62,254.21 on 12 September 2018, while denying to have received any other amounts from the club, allegedly deposited in a bank in Country D. Thus, he insists that the amount of EUR 40,445,79 remains outstanding, corresponding to the unpaid balance of EUR 21,745.79 plus the penalty fee of EUR 18,700, “detained from the valid payment you made on September 12”.

10. On 11 October 2017, the club sent a letter to the player, alleging it did not manage to pay the due amounts, since the player had been ignoring its requests to provide the club with the bank account as well as with his current address, which are “requirements set out by the Foreign Currency Legislation of Country D”. Consequently, the club alleges to have had no other option than to pay him the amount of 1,512,678.19 in the currency of Country D, corresponding to EUR 21,745.79, to his bank account in Country D, used during the contract.

11. On 21 December 2017, the player once again wrote to the club, warning it in advance about the amount due at the latest on 1 January 2018, while pointing out that such amount must be paid to the bank account indicated in paragraph 6 of the termination agreement and that a delay in payment would imply the application of the agreed penalty.

12. On 1 February 2018, the player sent the club a new default notice, requesting the payment of “the amount which due date is already exceeded for more than 30 days and also the penalties up to the day of the execution of the compensation, in amount of 1700 euro for each day of delay starting from 2th of January”.

13. On 20 March 2018, the player lodged a claim against the club in front of FIFA requesting the club to pay the following amounts:

- EUR 225,000, corresponding to the compensation as per the termination agreement due at the latest on 1 January 2018;

- EUR 22,100 (i.e. 13 days x EUR 1,700), corresponding to the penalty for the delayed payment of the amount of EUR 84,000 due on 1 September 2017, but only received by the player in full on 14 September 2017;

- Penalties of EUR 1,700 per day for the non-payment of EUR 225,000, “starting from 2th of January till the effective payment.

14. In his claim, the player explains that, in spite of his several reminders and of the fact that the termination agreement clearly specified the bank account to which the due amounts should be paid, the club delayed without any valid reasons the payment of the amount of EUR 84,000 due on 1 September 2017 and never paid the amount of EUR 225,000 due on 1 January 2018. Thus, the club should be held liable to pay him EUR 225,000 as well as the penalty fee agreed upon by the parties in the termination agreement. In particular, the player considers the penalty fee proportionate, as it corresponds roughly to his daily salary as per the contract (EUR 50,000 / 30 days = EUR 1,666).

15. In its reply, the club stated that on 24 August 2017, it made the payment towards the player in the amount of 1,512,678.19 in the currency of Country D, corresponding to EUR 21,745.79, to the account “which was available to the Club, as this account was used for payments under the Contract”. On 12 September 2017, the club paid the amount of EUR 62,254.21 to the account specified by the player and therefore, according to the club, the full amount of EUR 84,000 was paid.

16. The club further argued that due to financial difficulties, it was not able to make the agreed payment on 1 January 2018. However, after “receiving some money”, the club confirmed to have made the payment in the amount of EUR 225,000 on 29 May 2018.

17. The club deemed, that the penalty fee agreed in the agreement is “disproportionate and abusive and, thus, should be reduced”. In particular, the club claims that a penalty of EUR 1,700 per day for a debt of EUR 225,000 is equivalent to interest of 275,77% p.a. or of 739% p.a. for a debt of EUR 84,000. Consequently, the club argued, that a penalty fee of “5% per annum is an appropriate amount of penalty which the Club should pay towards the Player” and agrees to pay the amount of EUR 4,561.64 for the delay in payment of EUR 225,000 from 2 January to 29 May 2018 and the amount of EUR 93.81 for the delay in payment of the amount of EUR 62,254.21 from 2 to 12 September 2017.

18. On 11 June 2018, the player confirmed the payment of the amount of EUR 225,000 by the club, but insisted on the payment of the penalty fee, as agreed by the parties in the termination agreement, amounting to EUR 275,400 as the amount of EUR 225,000 remained unpaid for 149 days.

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 matter at hand. In this respect, it took note that the present matter was submitted to FIFA on 20 March 2018. Consequently, the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (edition 2018; hereinafter: Procedural Rules) are 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 (2018 edition) the Dispute Resolution Chamber is competent to deal with the matter at stake, which concerns an employment-related dispute with an international dimension between a player of Country B and a club of Country D.

3. Furthermore, the Chamber analysed which regulations should be applicable as to the substance of the matter. In this respect, it confirmed that in accordance with art. 26 par. 1 and 2 of the Regulations on the Status and Transfer of Players (2016 and 2018 editions), and considering that the present claim was lodged on 20 March 2018, the 2018 edition of said regulations (hereinafter: Regulations) is applicable to the matter at hand as to the substance.

4. The competence of the Chamber and the applicable regulations having been established, the Chamber entered into the substance of the matter. In this respect, the Chamber started by acknowledging all the above-mentioned facts as well as the arguments and the documentation submitted by the parties. However, the Chamber emphasised that in the following considerations it will refer only to the facts, arguments and documentary evidence, which it considered pertinent for the assessment of the matter at hand.

5. The Chamber started with a careful examination of the content of the termination agreement concluded between the Claimant and the Respondent on 18 August 2017. In this respect, it noted that said agreement provided for the Claimant to receive from the Respondent the amount of EUR 84,000 at the latest on 1 September 2017 and EUR 225,000 at the latest on 1 January 2018.

6. Furthermore, the Chamber observed that in case of non-compliance of the aforementioned payments within the relevant deadlines, the termination agreement stipulated in its paragraph 4 in fine that the Respondent would pay to the Claimant the additional amount of EUR 1,700 “for each day of delay without any other previous notification“.

7. In continuation, the Chamber noted that the Claimant, on the one hand, while finally acknowledging full receipt of the main amounts stipulated in the termination agreement, namely EUR 84,000 plus EUR 225,000, still requested to be awarded the amounts of EUR 22,100 and EUR 275,400 on the basis of paragraph 4 of the agreement, arguing that the Respondent had not paid the two instalments of the agreed amount on the respective due dates.

8. On the other and, the Chamber noted that the Respondent deems that the daily penalty for delay stipulated in paragraph 4 of the termination agreement consists in fact of an excessive and disproportionate interest rate, and therefore should be reduced to 5% p.a..

9. With the above-mentioned considerations in mind, the Chamber focused its attention on the content of paragraph 4 in fine of the termination agreement, which literally establishes that: “In the case of non-payment of any above mentioned sums within the specified period, the Player is entitled and the Club pays the penalty in the amount of 1,700 […] euros for each day of delay without any other previous notification.” .

10. The Chamber noted that, in spite of the fact that the aforementioned paragraph indeed mentioned the word “penalty”, the amount of EUR 1,700 added to the debt per day of delay in payment in fact consists of a hidden interest rate, and not a penalty. In fact, such daily amount accounts to an interest of 738% p.a. over the first instalment of EUR 84,000 and 275% p.a. over the second instalment of EUR 225,000. These interest rates are clearly excessive and disproportionate, in accordance with the Chamber’s jurisprudence as well as with Swiss law.

11. Bearing in mind the foregoing, the Chamber noted that it was not disputed by the Respondent that the amounts due as per the termination agreement were in fact paid late, and that no valid reasons were provided by the Respondent for such delay. Furthermore, the Chamber also noted that the termination agreement indeed stipulated the application of interest for late payment, however at excessive rate. Thus, taking into consideration its well-established jurisprudence as well as Swiss law, the Chamber decided to reduce such interest to the amount of 18% p.a., over both instalments, as from their respective due dates until the date when they were actually paid.

12. In conclusion, the Chamber decided to partially accept the claim of the Claimant and award him interest of 18% p.a. on the amount of EUR 84,000, as from 2 September 2017 until 12 September 2017, and interest of 18% p.a. on the amount of EUR 225,000, as from 2 January 2018 until 29 May 2018.

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III. Decision of the Dispute Resolution Chamber

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

2. The Respondent, Club C, has to pay to the Claimant, within 30 days as from the date of notification of this decision, interest of 18% p.a. on the amount of EUR 84,000, as from 2 September 2017 until 12 September 2017.

3. The Respondent has to pay to the Claimant, within 30 days as from the date of notification of this decision, interest of 18% p.a. on the amount of EUR 225,000, as from 2 January 2018 until 29 May 2018.

4. In the event that the aforementioned sums are not paid by the Respondent within the stated time limit, the present matter shall be submitted, upon request, to FIFA’s Disciplinary Committee for consideration and a formal decision.

5. The Claimant is directed to inform the Respondent immediately and directly of the account number to which the remittances in points 2. and 3. above are 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:

Omar Ongaro

Football Regulatory Director

Encl. CAS directives