F.I.F.A. – Dispute Resolution Chamber / Camera di Risoluzione delle Controversie – labour disputes / controversie di lavoro (2019-2020) – fifa.com – atto non ufficiale – Decision 17 January 2020

Decision of the

Dispute Resolution Chamber

passed in Zurich, Switzerland, on 17 January 2020,

in the following composition:

Omar Ongaro (Italy), Deputy Chairman Stefano Sartori (Italy) member, José Luis Andrade (Portugal) member,

on the matter between the player,

Reiner Alvey Castro Barrera, Venezuela

represented by Mr. Federico Ángel Marotta

as Claimant

against the club,

Nantong Zhiyun FC, China PR

Represented by Mr. Joao Felipe Lobao

as Respondent

regarding an employment-related dispute

arisen between the parties

I. Facts of the case

1. On 12 January 2019, the parties signed a document labelled “Employment Pre-Contract” (hereinafter: “the pre-contract”), valid as from January 2019 until December 2021. According to this document, the Claimant was entitled to receive USD 360,000 as annual salary.

2. The pre-contract further established, inter alia, that “this Employment pre-contract is by no means representing as official signed employment contract”.

3. On 2 January 2019, the Respondent sent a letter to the Claimant, offering him a contract for three years with an annual salary of USD 300,000.

4. By means of a letter dated 3 January 2019, the Respondent amended its previous offer and offered the Claimant a contract for three years with an annual salary of USD 360,000.

5. On 12 January 2019, the Respondent sent to the Claimant an “Invitation Letter”, by means of which it invited the Claimant to come China “for the medical check in order to potentially sign the formal employment contract”.

6. On 24 January 2019, the Respondent sent a letter to the Claimant, inviting him to “conduct a trial training with the team” between 27 and 29 January 2019.

7. Finally, and on unspecified date, the Respondent and the Claimant’s former club, the Venezuelan club Caracas FC, signed a transfer agreement over the transfer of the Claimant for an amount of USD 500,000. Pursuant to this document, “the transfer will made when and only when the [Claimant] signs the employment contract” with the Respondent.

8. On 4 June 2019, the Claimant lodged a claim in front of FIFA for breach of contract, requesting the total amount of USD 1,080,000, i.e. the total value of the pre-contract (USD 360,000 x 3), plus “interest”.

9. In his claim, the Claimant explained that, on 17 January 2019, he traveled to China in order to undergo the relevant medical examinations.

10. According to the Claimant, after having passed the medical examinations, the Respondent "did not perform any act to formalize the signature of the employment contract”. In this respect, the Claimant explained that, on 24 January 2019, he only received the letter from the Respondent in order to conduct a “trial training” (cf. point 6 above).

11. Since this trial training was not agreed between the parties, the Claimant refused to do it. Within this context, the Claimant explained that, on 26 January 2019, the Respondent informed him that he had a ticket to return to Venezuela on 27 January 2019.

12. With those considerations on mind, the Claimant argued that that the pre-contract contained all the elements (“essentialia negotii”) in order to be regarded as an employment contract and that consequently, he is entitled to receive a compensation for breach of contract.

13. Despite having been invited to do so, the Respondent did not reply to the claim.

II. Considerations of the Dispute Resolution Chamber

1. First of all, the Dispute Resolution Chamber (hereinafter: “the DRC or the Chamber”) analyzed whether it was competent to deal with the case at hand. In this respect, it took note that the present matter was submitted to FIFA on 4 June 2019. Taking into account the wording of art. 21 of the 2019 edition of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (hereinafter: “the Procedural Rules”), the aforementioned edition of the Procedural Rules is applicable to the matter at hand.

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 conjunction with art. 22 lit. b) of the Regulations on the Status and Transfer of Players, 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 Venezuelan player and a Chinese club.

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, and considering that the present claim was lodged on 4 June 2019, the June 2019 edition of said regulations (hereinafter: “the Regulations”) is applicable to the matter at hand as to the substance.

4. The competence of the Chamber and the applicable regulations having been established, the Chamber entered into the substance of the matter. The DRC continued by acknowledging the above-mentioned facts as well as the documentation contained in the file in relation to the substance of the matter. 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 Single Judge first observed that the Respondent had never submitted its position to the claim lodged against it by the Claimant, despite having been asked to do so by FIFA. Therefore, the Single Judge concluded that, in this way, the Respondent had renounced its right of defence and, thus, it had to be assumed that it had accepted the allegations of the Claimant.

6. Bearing in mind the aforementioned, the Single Judge referred to art. 9 par. 3 of the Procedural Rules and pointed out that in the present matter a decision shall be taken upon the basis of the documents on file, in other words, upon the allegations and documents submitted by the Claimant.

7. In continuation, the Chamber took note that the Claimant and the Respondent signed the pre-contract valid as from January 2019 until December 2021, according to which the Claimant was entitled to receive an annual salary amounting to USD 360,000.

8. The DRC underlined that the main legal issue at stake consists in establishing whether the pre-contract can be considered as an employment contract.

9. At this stage, the DRC reiterated that the Respondent did not present its position in this matter.

10. On the other hand, the DRC acknowledged that the Claimant maintained that, in fact, by signing the pre-contract which contained all the elements of an employment contract the parties entered into an employment relationship and, as a consequence, the Respondent is to be held liable for its termination.

11. Consequently, the Chamber focussed its attention on the question as to whether a legally binding employment contract had been concluded by and between the Claimant and the Respondent.

12. In this regard, the Chamber recalled that in order for an employment contract to be considered valid and biding apart from the signature of the employer and the employee, it should contain the essentialia negotii of an employment contract, such as the parties to the contract and their role, the duration of the employment relationship, the remuneration and the signature of both parties. Moreover, the members of the Chamber highlighted that the denomination of a contract is not an element of validity. In this context, after a careful study of the pre-contract presented by the Claimant, the Chamber concluded that all such essential elements are included in the pertinent document, in particular the fact that the relevant document established that the Claimant is entitled to receive remuneration, including a monthly salary, in exchange for his services to the club as a player.

13. On account of all the above, the Chamber concluded that, by having signed the pre-contract, a valid legally binding employment contract had been entered into by and between the Claimant and the Respondent on 12 January 2019.

14. In this context, the Chamber was eager to emphasize, once established that the parties concluded a valid and legally binding employment contract, that the Respondent had not performed any of its obligations under the employment contract and the DRC considered that it did not have just cause not to execute the contract which, unavoidably, leads to the decision that such contract was breached by the Respondent.

15. On account of the above circumstances, the Chamber established that the Respondent had obviously no longer been interested in the Claimant’s services by sending back the player to his home country, i.e. Venezuela, on 27 January 2019. The Chamber concluded that such conduct clearly constitutes a breach of contract and, accordingly, decided that the

Respondent has produced the premature termination without just cause of the employment contract entered into between the parties.

16. Having established that the Respondent is to be held liable for the early termination of the employment contract without just cause, the Chamber focused its attention on the consequences of such termination. Taking into consideration art. 17 par. 1 of the Regulations, the Chamber decided that the Claimant is entitled to receive from the Respondent an amount of money as compensation for breach of contract.

17. In continuation, the Chamber focused its attention on the calculation of the amount of compensation for breach of contract 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.

18. In application of the relevant provision, the Chamber held that it first of all had to clarify as to whether the pertinent employment contract contains 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. In this regard, the Chamber established that no such compensation clause was included in the employment contract at the basis of the matter at stake.

19. Bearing in mind the foregoing, the Chamber proceeded with the calculation of the monies payable to the player under the terms of the employment contract and concluded that the Claimant would have received in total USD 1,080,000 as remuneration had the contract been executed until its expiry date.

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

21. The Chamber noted that, in March 2019, the Claimant had signed an employment contract with the Chilean club, Deportes Temuco, valid as from 1 February 2019 until the end of the season 2022, enabling him to earn a monthly salary of USD 7,000 providing a total income of USD 245,000.

22. In accordance with the constant practice of the Dispute Resolution Chamber and the general obligation of the player to mitigate his damages, such remuneration under the new employment contract shall be taken into account in the calculation of the amount of compensation for breach of contract. What is more, the Chamber also considered it important to point out that, although the employment contract was fully valid and enforceable, the execution of the contract actually never started, an element which equally should be taken into consideration in the calculation of the amount of compensation.

23. On account of all of the above-mentioned considerations and the specificities of the case at hand, the Chamber decided that the Respondent must pay the amount of USD 835,000 (USD 1,080,000 – USD 245,000) to the Claimant as compensation for breach of contract, which is to be considered reasonable and proportionate in the case at hand.

24. In addition, taking into account the Claimant´s request and the well-established jurisprudence of the Dispute Resolution Chamber in this respect, the DRC decided that the Respondent shall pay 5% interest p.a. on the amount of USD 835,000 as from date of claim, i.e. 4 June 2019 until the date of effective payment.

25. Furthermore, taking into account the consideration under number II./3. above, the DRC referred to par. 1 and 2 of art. 24bis of the Regulations, which stipulate that, with its decision, the pertinent FIFA deciding body shall also rule on the consequences deriving from the failure of the concerned party to pay the relevant amounts of outstanding remuneration and/or compensation in due time.

26. In this regard, the DRC pointed out that, against clubs, the consequence of the failure to pay the relevant amounts in due time shall consist of a ban from registering any new players, either nationally or internationally, up until the due amounts are paid and for the maximum duration of three entire and consecutive registration periods.

27. Therefore, bearing in mind the above, the DRC decided that, in the event that the Respondent does not pay the amount due to the Claimant within 45 days as from the moment in which the Claimant, following the notification of the present decision, communicates the relevant bank details to the Respondent, a ban from registering any new players, either nationally or internationally, for the maximum duration of three entire and consecutive registration periods shall become effective on the Respondent in accordance with art. 24bis par. 2 and 4 of the Regulations.

28. Moreover, the DRC recalled that the above-mentioned sanction will be lifted immediately and prior to its complete serving upon payment of the due amounts, in accordance with art. 24bis par. 3 of the Regulations.

29. The Dispute Resolution Chamber concluded its deliberations in the present matter by establishing that any further claims lodged by the parties are rejected.

III. Decision of the Dispute Resolution Chamber

1. The claim of the Claimant, Reiner Alvey Castro Barrera, is partially accepted.

2. The Respondent, Nantong Zhiyun FC, has to pay to the Claimant compensation for breach of contract in the amount of USD 835,000, plus 5% interest p.a. as from 4 June 2019 until the date of effective payment.

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

4. The Claimant is directed to inform the Respondent, immediately and directly, preferably to the e-mail address as indicated on the cover letter of the present decision, of the relevant bank account to which the Respondent must pay the amount mentioned under point 2. above.

5. The Respondent shall provide evidence of payment of the due amount in accordance with point 2. above to FIFA to the e-mail address psdfifa@fifa.org, duly translated, if need be, into one of the official FIFA languages (English, French, German, Spanish).

6. In the event that the amount due plus interest in accordance with point 2. above is not paid by the Respondent within 45 days as from the notification by the Claimant of the relevant bank details to the Respondent, the Respondent shall be banned from registering any new players, either nationally or internationally, up until the due amounts are paid and for the maximum duration of three entire and consecutive registration periods (cf. art. 24bis of the Regulations on the Status and Transfer of Players).

7. The ban mentioned in point 6. above will be lifted immediately and prior to its complete serving, once the due amount is paid.

8. In the event that the aforementioned sum plus interest is still not paid by the end of the ban of three entire and consecutive registration periods, the present matter shall be submitted, upon request, to FIFA’s Disciplinary Committee for consideration and a formal decision.

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Note related to the publication:

The FIFA administration may publish decisions issued by the Players’ Status Committee or the DRC. Where such decisions contain confidential information, FIFA may decide, at the request of a party within five days of the notification of the motivated decision, to publish an anonymised or a redacted version (cf. article 20 of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber).

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. 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