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 25 October 2018

Decision of the

Dispute Resolution Chamber

passed in Zurich, Switzerland, on 25 October 2018,

in the following composition:

Geoff Thompson (England), Chairman

Stefano La Porta (Italy), member

Muzammil Bin Mohamed (Singapore), member

Tomislav Kasalo (Croatia), member

Joaquim Evangelista (Portugal), 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 3 February 2016, the Player of Country B, Player A (hereinafter: the Claimant), and the Club of Country D, Club C (hereinafter: the Respondent), signed an employment contract valid as from 4 February 2016 until 31 December 2018.

2. According to art. 15 of the employment contract, the Claimant was entitled, inter alia, to:

a. a monthly salary of 1,670,000 as from 4 February until 31 December 2016;

b. a monthly salary of 1,850,000 as from 1 January until 31 December 2017;

c. a monthly salary of 2,100,000 as from 1 January until 31 December 2018.

3. According to art. 16 of the employment contract, the Claimant’s salary had to be paid “until the 10th day of the month by bank transfer or in cash”.

4. Furthermore, art. 45 of the employment contract provides that, in case the Respondent terminates the contract without notice, the Claimant “shall be entitled to absentee pay due for twelve months, or if the time remaining from the fixed period is less than one year, for the remaining time period”.

5. Moreover, according to art. 50 of the employment contract, “[the Claimant] accepts that if – considering Section 8.1) as well – he fails to get into [the Respondent]’s first team or if he, based on the professional staff’s decision, is transferred to [the Respondent]’s second or other team, his base wage established in the present employment contract shall be reduced by 50% from the first day of the month following the decision”.

6. By letter dated 19 January 2017, the Respondent informed the Claimant that “according to [his] working contract’s 50. point, based on the professional staff’s decision, [he was] transferred to Club C’s second team from the start of the preparation of the spring season 2017 (10 January 2017)” and that “according to the contract’s point” his wage had been reduced by 50%.

7. On 24 April 2017, the Claimant addressed the Respondent in writing asking: (i) to be “immediately included in the first team trainings and matches”, (ii) to be paid 925,000 each for the months of February and March 2017, “plus interest” as of, respectively, 11 March and 11 April 2017 and (iii) to be paid as stipulated in art. 15 of the employment contract for the upcoming months and seasons. With the same correspondence, the Claimant formally requested the Respondent to withdraw its decision of 19 January 2017.

8. By a further letter addressed to the Respondent on 13 July 2017, the Claimant reiterated the requests expressed with his previous correspondence and put the Respondent in default of 925,000 each for the months of February, March, April, May and June 2017, plus the corresponding interests, requesting that the Respondent fulfil said obligations within 30 days.

9. In reply to said correspondence, on 14 July 2017, the Respondent informed the Claimant that, “pursuant to point 50 of the employment contract, the [Respondent] has the right to move the [Claimant] to the 2nd team, which the [Claimant] accepted with signing the contract”. With said correspondence, the Respondent added that the decision had been taken by the “professional staff”, which “evaluated the [Claimant]’s performance and attitudes weekly”.

10. By letter dated 14 August 2017, the Claimant informed the Respondent that he was terminating the employment contract with just cause “due to the fundamental breach of the Contract by the [Respondent]”.

11. On 5 March 2018, the Claimant lodged a claim against the Respondent in front of FIFA maintaining that he had just cause to terminate the contract and requesting to be awarded the total amount of 40,000,000, consisting of:

a. 5,550,000 “for the remaining wages” as from February until July 2017, plus 5% interest p.a. on 925,000 for each of those months, to be calculated as of the 11th day of each month from March until August 2017;

b. 34,450,000 as compensation for breach of contract, corresponding to its residual value, plus interest “as of 15 August 2017 until the payday”.

12. More in particular, the Claimant argued that, on 10 January 2017, the Respondent’s officials had told him that the Respondent was not counting on his services anymore and instructed him to continue training with its second team. The Claimant added that, 10 days later, the Respondent formally informed him that he had been transferred to the second team and that his wage had been reduced by 50%.

13. Furthermore, the Claimant explained that he followed the Respondent’s decision and kept training with its second team, receiving 50% of the salary established in his contract as of February 2017, while hoping to be moved back to the Respondent’s first team.

14. The Claimant added that the Respondent ordered him to immediately return the official car and to stop attending the first team lunches and using the main pitch at the Respondent’s premises.

15. Moreover, the Claimant pointed out that the Respondent had ignored all his requests addressed in January 2017 after it had taken the decision to move him to the second team and that it had ignored his letter of 24 April 2017 to be put back with the first team. The Claimant recalled that the Respondent only replied to his correspondence of 13 July 2017, informing him that the contested decision was taken in accordance with art. 50 of the employment contract.

16. The Claimant further explained that, after his letter of 13 July 2017, he had been put under “enormous and constant pressure from various representatives of the [Respondent]” and that, eventually, he had been transferred to the under 19 squad which, at the time, allegedly competed at amateur level in the “fourth tier of Football in Country D”. The Claimant added that, subsequently, he had been told by the Respondent that there would be no second team in the upcoming season and that there was no way that he would ever be moved back to the first team.

17. The Claimant argued that, in this context, and given that he had not played a single minute with the first team for more than 8 months and received 50% of his salaries for more than 6 months, he had just cause to terminate his contract on 14 August 2017.

18. In its reply, the Respondent asked that the claim be rejected in its entirety.

19. More in particular, the Respondent acknowledged that it had moved the Claimant to the second team and that his salary had been reduced by 50%, but argued that it was entitled to do so in accordance with art. 50 of the employment contract.

20. Moreover, the Respondent recalled Appendix 6 of the Regulations of the Football Federation of Country D (hereinafter: Football Federation E) on the Status and Transfer of Players and pointed out that, under their Section 47 of chapter XI, there is a paragraph of the same tenor as art. 50 of the employment contract. Moreover, the Respondent added that said regulations apply on a compulsory basis and that, therefore, art. 50 of the employment contract is lawful and, consequently, so is the decision to move the Claimant to the second team and reduce his salary.

21. Furthermore, the Respondent underlined that the decision to move the Claimant to the second team was due to his physical conditions, which were “not appropriate” for the first team of a professional club. However, the Respondent pointed out that, pursuant to art. 50 of the employment contract, it was entitled to take such decision unconditionally.

22. The Respondent further highlighted that the Claimant kept having access to the same facilities, training pitches and doctors of the first team and that the second team’s players are not amateurs but professionals. Consequently, according to the Respondent, the Claimant had not suffered any detriment by having been moved to the second team.

23. Subsidiarily, the Respondent asked FIFA to take into account the remuneration the Claimant received from the employment contracts he signed with his new clubs, should the DRC decide that he is entitled to compensation for breach of contract.

24. In his replica, the Claimant reiterated his position and added that art. 50 of the employment contract is unlawful and contrary to the FIFA Regulations, being of potestative nature. The Claimant further pointed out that his physical conditions were appropriate and that he had never been addressed by the Respondent in that regard.

25. In its duplica, the Respondent entirely reiterated the position expressed in its reply to the claim and added that all Clubs in Country D have to apply art. 50 of the employment contract. In this respect, the Respondent submitted a statement from Manager F, Football Federation E’s TMS manager, declaring that “all the Clubs in Country D have an obligation to use the professional contract sample”.

26. The Claimant informed FIFA that, on 30 August 2017, he signed a contract with the Club of Country G, Club H, valid as from the date of signature until 31 May 2018, for a monthly salary of EUR 1,000. The Claimant added that, on 8 November 2017, he amicably terminated said contract, recognising that the club owed him EUR 3,000. Furthermore, the Claimant informed that, as from 19 January 2018 until 19 May 2018, he was registered as an amateur with the Club of Country B, Club J, and received no remuneration. Lastly, the Claimant informed that, on 4 July 2018, he signed a contract with the Club of Country B, Club K, valid as from 21 June 2018 until 21 June 2020. Pursuant to said contract, the Claimant was entitled to a signing-on fee of 21,500, to be paid as follows: 2,500 at signing and the rest “in monthly instalments in the amount of 1,500 by the beginning of the second (spring) part of the season, when the amount of 4,000 shall be paid”. The contract specifies that “the payment of the fee continues to be made in monthly instalments until the whole amount is paid”. Moreover, according to the contract, the Claimant was entitled to a monthly salary of gross 796.02.

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 stake. In this respect, the DRC took note that the present matter was submitted to FIFA on 5 March 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 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 of Country B and a Club of Country D.

3. 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 2018) and considering that the present claim was lodged in front of FIFA on 5 March 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.

4. 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.

5. In this respect, the DRC acknowledged that, on 3 February 2016, the Claimant and the Respondent concluded an employment contract valid as from 4 February 2016 until 31 December 2018, pursuant to which the Claimant was entitled to, inter alia, a monthly salary of 1,670,000 for the first contractual year, a monthly salary of 1,850,000 for the second and a monthly salary of 2,100,000 for the third.

6. In continuation, the members of the Chamber observed that, according to the Claimant, he had just cause to unilaterally terminate the employment contract on 14 August 2017, due to the fact that, following its decision of 19 January 2017 to relegate him to the second team, by the time he terminated the employment contract, the Respondent had only paid half of his salary for

6 consecutive months, alleging it was entitled to do so on the ground of art. 50 of the employment contract.

7. In continuation, the members of the Chamber noted that the Respondent, for its part, did not contest the recollection of the events made by the Claimant. However, the DRC took note that the Respondent deemed that its decision to relegate the Claimant to the second team and, most importantly, to halve his monthly salary was justified in light of the aforementioned contractual provision.

8. On account of the above, the Chamber highlighted that the underlying issue in this dispute was to determine as to whether the employment contract had been terminated by the Claimant with just cause and, subsequently, to determine the consequences thereof.

9. Moreover, the members of the Chamber observed that, in light of the circumstances of the case and considering the disagreement of the parties on the point, the core of the decision revolved around the question as to whether the Respondent could lawfully decrease the Claimant’s salary on the basis of art. 50 of the employment contract.

10. Having said that, the members of the Chamber turned their attention to the contractual clause at stake and deemed it worthwhile to recall its tenor, according to which: “[the Claimant] accepts that if – considering Section 8.1) as well – he fails to get into [the Respondent]’s first team or if he, based on the professional staff’s decision, is transferred to [the Respondent]’s second or other team, his base wage established in the present employment contract shall be reduced by 50% from the first day of the month following the decision”.

11. In respect of the foregoing, the members of the DRC thought worth it to mention, as a preliminary remark, that nowhere in the employment contract “Section 8.1” the clause refers to is to be found. Without any additional clarifications in the parties’ submissions, the Chamber concluded that the clause refers to Section 8 of Country D’s Act I of 2004 on Sports, which is recalled, however without further specifications, in the preamble of the employment contract.

12. Having clarified that, the members of the Chamber noticed, first and foremost, that the clause had a clear non-reciprocal character, as it established a right solely in favour of the Respondent, inevitably giving rise to an unbalanced employment relationship between the parties. More in particular, the DRC underlined that said clause had the effect to arbitrarily modify the main element characterising any labour relationship, i.e. the obligation for one party to render his services towards the other party in turn of a contractually agreed remuneration, in the part in which it allowed the Respondent to curtail the Claimant’s salary at its own discretion.

13. In this respect, the Chamber referred to its well-established jurisprudence and emphasised that a player cannot be made object of a severe financial measure for alleged poor performance or, as in the case at stake, for a physical condition considered “not appropriate”, as this is a purely unilateral and subjective evaluation by the club. Thus, the Chamber stressed that poor or unsatisfactory performance of any kind cannot, by any means, be considered as a valid reason to reduce a player’s salary.

14. The members of the Chamber deemed it important to underline that the foregoing line of reasoning holds a fortiori against the Respondent’s argument that the contractual provision under scrutiny allowed it to take the decision to halve the Claimant’s salary in a totally uncondional fashion, regardless of any evaluation of his physical conditions.

15. The DRC further recalled that, according to the Respondent, Football in Country D clubs have to apply art. 50 of the employment contract, given that they allegedly “have an obligation to use the professional contract sample”. However, the DRC was eager to emphasise that the fact that said clause is somehow considered common practice in Football in Country D, or even reflected in Football Federation E standard contracts, cannot make up for its fundamental unfairness.

16. On account of the aforementioned considerations, the Chamber was of the unanimous opinion that said clause had to be disregarded in the part in which it allowed the Respondent to curtail the Claimant’s salary and, thus, rejected the Respondent’s main argument concerning the contractual legitimacy of its stance.

17. Having established the above, the members of the DRC turned their attention to the consequences of the Respondent’s decision of 19 January 2017 and observed that it remained uncontested that the Claimant received only half of his salary for 6 consecutive months.

18. As a result, the Chamber concluded that at the time the Claimant terminated the employment contract, the total amount of 5,550,000 was outstanding, corresponding to the remaining half of his salaries of February, March, April, May, June and July 2017. Therefore, the members of the Chamber considered that the Respondent had seriously neglected its contractual obligations towards the Claimant in a continuous and repeated manner, reason for which the latter had a just cause to terminate the contract on 14 August 2017, having previously put the Respondent in default of its financial obligations on 24 April 2017 and on 13 July 2017.

19. Consequently, the Chamber decided that the Respondent is to be held liable for the early termination of the employment contract with just cause by the Claimant.

20. In continuation, prior to establishing the consequences of the termination of the employment contract with just cause by the Claimant, the Chamber decided that the Respondent must fulfil its obligations as per the employment contract in accordance with the general legal principle of “pacta sunt servanda”. Consequently, the Chamber decided that the Respondent is liable to pay to the Claimant 5,550,000, pertaining to the second half of each of his salaries as from February 2017 until July 2017.

21. In addition, taking into consideration the Claimant’s claim, the Chamber decided to award the Claimant interest at the rate of 5% p.a. as of the day following the day on which each instalment fell due in accordance with the employment contract until the date of effective payment.

22. In continuation and having established that the Respondent is to be held liable for the early termination of the employment contract with just cause by the Claimant, 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 in addition to the aforementioned outstanding remuneration.

23. 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.

24. 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 observed that the matter at stake falls outside of the scope of the only clause contained in the employment contract concerning its unilateral premature termination.

25. 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 34,450,000 as remuneration had the employment contract been executed until its regular expiry date, i.e. 31 December 2018.

26. In continuation, the Chamber assessed 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(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.

27. In respect of the above, the Chamber recalled that the Claimant signed a number of employment contracts following the termination of the one at stake. More specifically, the Chamber recalled that, on 30 August 2017, the Claimant signed a contract with the Club of Country G Club H, valid as from the date of signature until 31 May 2018, for a monthly salary of EUR 1,000, which had been amicably terminated on 8 November 2017.

28. In this regard, the members of the Chamber deemed it important to point out that, by voluntarily agreeing to the early termination of his new employment contract with Club H on 8 November 2017, the Claimant had actually freely renounced to receive the income relating to the period of time between 8 November 2017 and 31 May 2018. Consequently, and in light of the above described circumstances, the Chamber concurred that the employment contract with Club H shall be taken into consideration in its full length in the calculation of the amount of compensation for breach of contract in the case at hand.

29. Moreover, the Chamber observed that, as from 19 January 2018 until 19 May 2018, the Claimant was registered as an amateur with the Club of Country B, Club J, and received no remuneration. The Chamber further took note that, on 4 July 2018, the Claimant signed a contract with the Club of Country B, Club K, valid as from 21 June 2018 until 21 June 2020.

30. The Chamber recalled that, pursuant to this last contract, the Claimant was entitled to a signing-on fee of 21,500, to be paid as follows: 2,500 at signing and the rest “in monthly instalments in the amount of 1,500 by the beginning of the second (spring) part of the season, when the amount of 4,000 shall be paid”. Furthermore, the members of the Chamber observed that said contract specified that “the payment of the fee continues to be made in monthly instalments until the whole amount is paid” and that the Claimant was entitled to a monthly salary of gross 796.02. However, the members of the DRC took into account the fact that the Claimant declared that, from the beginning of the relationship, he received the monthly instalments of the signing-on fee together with his salary.

31. Consequently, on account of all of the above-mentioned considerations, the specificities of the case at hand as well as the Claimant’s general obligation to mitigate his damage, the Chamber decided that the Respondent must pay the amount of 29,027,610 to the Claimant as compensation for breach of contract.

32. 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. 5 March 2018, until the date of effective payment.

33. The Chamber concluded its deliberations in the present matter by rejecting any further claim of the Claimant.

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, outstanding remuneration in the amount of 5,550,000, plus 5% interest p.a. as follows:

a. on 925,000 as from 11 March 2017 until the date of effective payment;

b. on 925,000 as from 11 April 2017 until the date of effective payment;

c. on 925,000 as from 11 May 2017 until the date of effective payment;

d. on 925,000 as from 11 June 2017 until the date of effective payment;

e. on 925,000 as from 11 July 2017 until the date of effective payment;

f. on 925,000 as from 11 August 2017 until the date of effective payment.

3. The Respondent has to pay to the Claimant, within 30 days as from the date of notification of this decision, compensation for breach of contract in the amount of 29,027,610, plus 5% interest p.a. as from 5 March 2018 until the date of effective payment.

4. In the event that the amounts plus interest due to the Claimant in accordance with the above-mentioned numbers 2. and 3. are 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 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 (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