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 18 June 2020

Decision of the

Dispute Resolution Chamber

passed on 18 June 2020,

regarding an employment-related dispute concerning the player Walter Ariel Bou

COMPOSITION:

Geoff Thompson (England), Chairman Mohamed Muzammil (Singapore), member Stefano Sartori (Italy), member

CLAIMANT:

Walter Ariel Bou, Argentina

Represented by Mr Sebastian Pini

RESPONDENT:

Esporte Clube Vitoria, Brazil

Represented by Mr Bichara Abidão Neto & Mr Victor Eleuterio

I. FACTS OF THE CASE

1. On 22 January 2019, the Argentinian player, Walter Ariel Bou, (hereinafter: the Claimant or player), and the Brazilian club, Esporte Clube Vitória, (hereinafter: the Respondent or club) concluded a termination agreement, mutually agreeing upon the termination of the employment contract and the image rights agreement concluded on 10 July 2018, originally valid until 30 June 2019.

2. As per clauses 2 and 3 of the termination agreement, the club acknowledged owing the player the total amount of USD 150,000, corresponding to outstanding remuneration due as per the employment contract and the image rights agreement.

3. According to clause 4 of the termination agreement, the amount of USD 160,000 shall be paid in 6 equal instalments of USD 25,000 each, the first of which on 25 February 2019, and the seventh and last one of USD 10,000 on 25 August 2019.

4. Clause 6 of the termination agreement stipulates that in case any of the instalments is not paid on time, all other instalments shall automatically fall due and a penalty of 10% shall apply over the outstanding amount. Furthermore, interest of 1% per month applies over the outstanding amount until the date of payment.

5. In accordance with clause 10 of the termination agreement, the player will be authorized to collect the money from his pension fund (FGTS).

6. By correspondence dated 8 March 2019 and 31 October 2019, the player put the club in default of payment of the total amount of USD 176,000, as per the termination agreement, setting a 10 days’ time limit in order for the club to remedy the default, however to no avail. The amount corresponds to USD 160,000 as outstanding payments and USD 16,000 as penalty for the delay.

7. On 26 September 2019, the Claimant lodged a claim against the Respondent in front of FIFA, claiming the payment of the total amount of USD 176,000, corresponding to the following:

- USD 160,000 as outstanding payments;

- USD 16,000 as penalty for the delay;

- 5% interest over the entire amount as from the due dates.

8. The player explains that in spite of his reminders, the club never paid any amount stipulated in the termination agreement.

9. In its reply, the club firstly contested FIFA’s competence with regard to the image rights agreement concluded between the parties. The latter affirmed that since the aforementioned was a commercial agreement, it was governed by the Brazilian Civil Code. In particular, the club affirmed that “the amount stipulated in the Termination Agreement arises from (i) the Employment Agreement between the Player and EC Vitória and (ii) the Image Rights Agreement between EC Vitória and the Company. While the Employment Agreement is, obviously, “employment-related”, the Image Rights Agreement is a purely commercial agreement, by which the Company sublicensed to EC Vitória the rights to use and exploit the Player’s image, feature, voice, name and nickname. The Image Rights Agreement is therefore governed by the Brazilian Civil Code”.

10. In addition, the club, by invoking the Brazilian law, sustained that “the jurisdiction of ordinary courts in Brazil is mandatory for employment-related disputes and cannot be set aside by an agreement of the parties.”

11. The club further added that “in the absence of a jurisdiction clause in the Termination Agreement, Clause 14 of the Image Rights Agreement shall apply – at least to the extent that the amounts due to the Company are concerned.”

12. Moreover, the club specified that “[f]rom the total amounts due by EC Vitória under the Employment Agreement and the Image Rights Agreement, the basic remuneration stipulated in the latter corresponds to 38% (thirty-eight percent). As a direct inference, from the USD 160,000.00 (one hundred and sixty thousand US Dollars) stipulated in the Termination Agreement, at least USD 60,800.00 (sixty thousand and eight hundred US Dollars) derive from the Image Rights Agreement.”

13. Furthermore, the club stated that the amounts stipulated in the employment agreement and in the image rights agreement, and eventually paid by the club to the player, were fixed in Brazilian Reais, the Brazil’s local currency. In addition, it held that in accordance with the Brazilian Civil Code, by stipulating the payment of amounts in foreign currency, clauses 2 and 4 of the termination agreement contravened Brazil law and shall, therefore, be considered null and void.

14. In conclusion, the club requested the following:

a. “Dismiss all allegations put forward by the Player;

b. Hold the Player’s claim inadmissible for lack of jurisdiction; or

c. Reject the Player’s claim; and

d. In any case, order the Player to bear all administrative, procedural costs and expenses related to the present claim (if any).”

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 26 September 2019. Taking into account the wording of art. 21 of the 2020 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 DRC 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 (hereinafter: the Regulations), the DRC is, in principle, competent to deal with the matter at stake, which concerns an employment–related dispute with an international dimension between a player and a club.

3. The DRC, however, acknowledged that the Respondent contested the competence of FIFA’s deciding bodies on the basis that the requested payment is partially related to the payment of image rights.

4. In this regard, the Chamber pointed out that the player’s claim is not based on the image rights agreement concluded between the parties on 10 July 2018, to which according to the club was governed by the Brazilian Civil Code, but rather on the termination agreement signed on 22 January 2019.

5. As result of the aforementioned, the Chamber concluded that the club’s objection towards the competence of FIFA has to be rejected. Thus, the Chamber is competent to consider the present matter as to the substance, on the basis of art. 24 par. 1 in combination with art. 22 lit. b) of the Regulations on the Status and Transfer of Players and the claim is admissible.

6. Furthermore, the Chamber analysed which edition of the 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, and considering that the present claim was lodged on 26 September 2019, the June 2019 edition of said regulations is applicable to the matter at hand as to the substance.

7. In continuation, the DRC started by acknowledging all the above-mentioned facts as well as the arguments and the documentation submitted by the parties. However, the DRC emphasised that in the following considerations it will refer only to the facts, arguments and documentary evidence, which he considered pertinent for the assessment of the matter at hand.

8. Having said this, the Chamber proceeded with an analysis of the circumstances surrounding the present matter, the parties’ arguments as well the documentation on file and acknowledged that, on 10 July 2018, the player and the club had concluded an employment contract and an image rights agreement valid until 30 June 2019, which was mutually terminated on 22 January 2019 by a termination agreement.

9. Furthermore, the Chamber acknowledged that according to said termination agreement the amount of USD 160,000 would be paid in 7 instalments, the first of which on 25 February 2019.

10. Moreover, the DRC noted that the parties agreed upon an acceleration clause as well as a penalty fee of 10% over the outstanding amount in said termination agreement (cf. point I.4. above).

11. Furthermore, the members of the DRC took note of the player’s claim maintaining that the outstanding remuneration referred to in the termination agreement amounted to USD 160,000. In this framework, the player requested payment of his outstanding dues as well as the penalty, i.e. USD 16,000 plus 5% interest p.a. over the entire amount as from the due dates.

12. Subsequently, the members of the DRC took note that the club, for its part, rejected the player’s claim.

13. In this context, the DRC considered that the arguments raised by the Respondent cannot be considered a valid reason for non-payment of the amount due from the termination agreement, in other words, the reasons brought forward by the Respondent in its defence do not exempt the Respondent from its obligation to fulfil its contractual obligations towards the Claimant.

14. Having said this, the DRC held that it was uncontested that the Respondent failed to pay the first instalment of the termination agreement on time, i.e. 25 February 2019 and therefore the acceleration clause established in clause 6 of the agreement became applicable.

15. Therefore, as a first conclusion, the DRC underlined that in accordance with the basic legal principle of pacta sunt servanda, which in essence means that agreements must be respected by the parties in good faith, the Claimant is entitled to receive from the Respondent the amount of USD 160,000 relating to the outstanding remuneration pursuant to the termination agreement in accordance with its clause 6.

16. 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 the payment fell due in accordance with the contract, i.e. 26 February 2019, until the date of effective payment.

17. Subsequently, the Chamber focussed its attention on the penalty clause contained in clause 6 of the termination agreement, in light of the fact that the payments resulting from the termination agreement remained outstanding.

18. In this context, the DRC referred to its constant jurisprudence, in accordance with which penalty clauses may be freely entered into by the parties and may be considered acceptable, in the event that the pertinent written clause meets certain criteria, such as proportionality and reasonableness.

19. In the case at hand, the members of the Chamber deemed that the penalty fee of 10% over the outstanding amount, which the parties contractually agreed upon in the context of terminating the employment relation, is both proportionate and reasonable in the case at hand and therefore, the Respondent is liable to pay to the Claimant the amount of USD 16,000 in accordance with clause 6 of the termination agreement.

20. With regard to the Claimant’s request for interest on the penalty fee, the members of the DRC referred to its jurisprudence in similar cases and concluded that the Claimant’s request for default interest on the penalty fee must be rejected.

21. Finally, the members of the Chamber established that any further claim lodged by the Claimant is rejected.

22. Furthermore, taking into account the consideration under number II./6. above, the Chamber 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.

23. In this regard, the Chamber 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.

24. Therefore, bearing in mind the above, the DRC decided that, in the event that the Respondent does not pay the amounts 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.

25. Finally, the Chamber recalled that the above-mentioned ban 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.

III. DECISION OF THE DISPUTE RESOLUTION CHAMBER

1. The claim of the Claimant, Walter Ariel Bou, is admissible.

2. The claim of the Claimant is partially accepted.

3. The Respondent, Esporte Clube Vitoria, has to pay to the Claimant USD 160,000 as outstanding remuneration plus 5% interest p.a. as from 26 February 2019 until the date of effective payment.

4. The Respondent has to pay to the Claimant a penalty of USD 16,000.

5. Any further claims of the Claimant are rejected.

6. The Claimant is directed to immediately and directly inform the Respondent of the relevant bank account to which the Respondent must pay the due amounts.

7. The Respondent shall provide evidence of payment of the due amounts in accordance with this decision to psdfifa@fifa.org, duly translated, if applicable, into one of the official FIFA languages (English, French, German, Spanish).

8. In the event that the amounts due, plus interest as established above are not paid by the Respondent within 45 days, as from the notification by the Claimant of the relevant bank details to the Respondent, the following consequences shall arise:

 1.

The Respondent shall be banned from registering any new players, either nationally or internationally, up until the due amount is paid and for the maximum duration of three entire and consecutive registration periods. The aforementioned ban mentioned will be lifted immediately and prior to its complete serving, once the due amounts are paid.

(cf. art. 24bis of the Regulations on the Status and Transfer of Players). 2.

In the event that the payable amounts as per in this decision 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 the FIFA Disciplinary Committee.

For the Dispute Resolution Chamber:

Emilio García Silvero

Chief Legal & Compliance Officer

NOTE RELATED TO THE APPEAL PROCEDURE:

According to article 58 par. 1 of the FIFA Statutes, this decision may be appealed against before the Court of Arbitration for Sport (CAS) within 21 days of receipt of the notification of this decision.

NOTE RELATED TO THE PUBLICATION:

FIFA may publish this decision. For reasons of confidentiality, 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 Procedural Rules).

CONTACT INFORMATION:

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