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 3 July 2019

Decision of the

Dispute Resolution Chamber (DRC) judge

passed on 3 July 2019,

by Philippe Diallo (France), DRC judge,

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 26 August 2017, the player of Country B Player A (hereinafter: the Claimant or the player) and the club of Country D Club C (hereinafter: the Respondent or the club) concluded an employment contract (hereinafter: the contract), valid as from the date of signature until 31 May 2018.

2. According to the contract, the player was entitled to a net monthly salary of EUR 11,111 payable in 9 monthly instalments at the end of each month.

3. On 31 January 2018, the Claimant and the Respondent concluded an agreement (hereinafter: the termination agreement) by means of which they terminated the contract with immediate effect.

4. According to art. 3 of the termination agreement, the Claimant was entitled to the net amount of EUR 40,000 payable in 2 instalments as follows:

- EUR 25,000 on 5 February 2018, “with 3 days maximum grace period until 8th February 2018”;

- EUR 15,000 on 31 May 2018, “with 3 days maximum grace period until 3rd June 2018”.

5. Art. 6 of the termination agreement stipulates that “if the second instalment is not successfully received by the Player until 4th June 2018, the Parties expressly agree on a penalty clause, which the parties freely adjust, in the net value of EUR 51,000, which shall be paid by the [Respondent] to the [Claimant] on 5 June 2018”.

6. On 6 June 2018, the Claimant put the Respondent in default for the payment of the second instalment of the termination agreement, in the amount of EUR 15,000.

7. On 13 August 2018, the Claimant lodged a claim against the Respondent in front of FIFA, requesting the payment of the second instalment of the termination agreement and the relevant penalty clause under art. 6, in the total amount of EUR 66,000.

8. The Claimant also requested 5% interest p.a. on the aforementioned total amount, as from 5 June 2018, and the imposition of sporting sanctions on the Respondent.

9. In his claim, the Claimant considered that, as he allegedly did not receive the payment of the second instalment, he was entitled to the relevant amount together with the penalty set out under art. 6 of the termination agreement.

10. On 3 September 2018, the Respondent remitted the payment of the second instalment of the termination agreement, in the amount of EUR 15,000, to the Claimant.

11. In its reply to the claim, the Respondent alleged that, before the expiry of the deadline for the payment of the second instalment, the Claimant and the Respondent agreed on the extension of such deadline until 31 August 2018, “with three days grace period”.

12. Moreover, the Respondent argued that the penalty clause was disproportionate and, thus, invalid. Furthermore, the Respondent maintained that such clause was not enforceable, since the payment of the second instalment was made by the Respondent.

13. In conclusion, the Respondent requested the rejection of the claim or, in the alternative, the imposition of 5% interest on the amount of EUR 15,000 as from 3 June 2018 until 3 September 2018.

14. In his replica, the Claimant confirmed his initial requests and maintained that the Respondent never contacted him after the conclusion of the termination agreement and denied having agreed on the extension of the deadline for the payment of the second instalment.

15. Finally, the Claimant acknowledged having received from the Respondent the amount of EUR 15,000 “relative to the second instalment of the termination agreement and this claim was already lodged”.

16. The Respondent, with its final comments, reiterated its previous argumentations.

II. Considerations of the DRC judge

1. First of all, the DRC judge analysed whether he was competent to deal with the matter at hand. In this respect, he took note that the present matter was submitted to FIFA on 13 August 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 DRC judge referred to art. 3 par. 2 and 3 of the Procedural Rules and confirmed that, in accordance with art. 24 par. 1 and 2 in conjunction with art. 22 lit. b) of the Regulations on the Status and Transfer of Players (edition June 2019) he is competent to decide on the present matter, which concerns an employment-related dispute with an international dimension between a player of Country B and a club of Country D.

3. In particular, and in accordance with art. 24 par. 2 lit. i) of the Regulations on the Status and Transfer of Players, the DRC judge confirmed that he may adjudicate in the present dispute, the value of which does not exceed CHF 100,000.

4. In continuation, the DRC judge analysed which regulations should be applicable as to the substance of the matter. In this respect, he confirmed that, in accordance with art. 26 par. 1 and 2 of the Regulations on the Status and Transfer of Players (edition June 2019), and considering that the present claim was lodged on 13 August 2018, the June 2018 edition of said regulations (hereinafter: Regulations) is applicable to the matter at hand as to the substance.

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

6. First, the DRC judge noted that the parties entered into an employment contract valid as from 26 August 2107 until 31 May 2018, which the parties terminated on 31 January 2018 by signing a termination agreement, according to which the Respondent committed to pay the Claimant the amounts of EUR 25,000 and EUR 15,000 respectively within 8 February and 3 June 2018.

7. In this context, the DRC judge took note of the content of art. 6 of the termination agreement, according to which “if the second instalment is not successfully received by the Player until 4th June 2018, the Parties expressly agree on a penalty clause, which the parties freely adjust, in the net value of EUR 51,000, which shall be paid by the [Respondent] to the [Claimant] on 5 June 2018”

8. In continuation, the DRC judge acknowledged that it was undisputed that, on 6 June 2019, the Claimant put the Respondent in default for the payment of the second instalment of the termination agreement, i.e. the amount of EUR 15,000.

9. Furthermore, the DRC judge duly noted that the Respondent performed the payment of the aforementioned instalment on 3 September 2018 only, namely after that the Claimant lodged his claim before FIFA.

10. With the above in mind, the DRC judge proceeded to examine the positions of the parties and took note that the Claimant, inter alia, considered that the penalty stipulated in art. 6 of the termination agreement was due.

11. Conversely, the Respondent alleged that the parties had agreed to extend the deadline for the payment of the second instalment until 31 August 2018 and argued that the aforementioned penalty, in the amount of EUR 51,000, was disproportionate and, consequently, invalid.

12. On account of the above and, in particular, the diverging positions of the parties, the DRC judge considered that the central issue of present dispute consists in assessing whether the penalty stipulated in the termination agreement is applicable and, in case, to what extent.

13. In this respect, the DRC judge, before going into the merit of the aforementioned issue, wished to recall that the Respondent indeed fulfilled its obligation, even though with delay, to provide the Claimant with the payment of the second instalment of the termination agreement and, thus, in accordance with the general legal principle of pacta sunt servanda.

14. Furthermore, with reference to the Respondent’s allegation that the parties had agreed to postpone the due date for the payment of the second instalment until 31 August 2018, the DRC judge wished to recall the basic principle of burden of proof, as established in art. 12 par. 3 of the Procedural Rules, according to which a party claiming a right on the basis of an alleged fact shall carry the respective burden of proof.

15. With the above in mind, the DRC judge considered that, as the Respondent did not corroborate its allegation with any evidence, he had no other option than to conclude that no agreement was concluded between the Claimant and the Respondent for the postponement of the relevant due date.

16. Subsequently, the DRC judge focussed its attention on the penalty clause in light of the Respondent having paid the second instalment of EUR 15,000 after the relevant deadline for payment had fallen due and the Claimant’s pertinent request.

17. In this context, the DRC judge acknowledged the arguments of both parties in respect of the penalty clause and 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. In this respect, the DRC judge further highlighted that, in order to determine as to whether a penalty clause is to be considered acceptable, the specific circumstances of the relevant case brought before it shall also be taken into consideration.

18. In the specific case at hand, the DRC judge took into account the business experience of the Respondent and the interest of the Claimant by timely receiving the outstanding amounts. The DRC judge concluded that, with regard to these criteria, the Respondent did not present any evidence that could lead to the conclusion that the Respondent had valid reasons for the late payment of the agreed amount, i.e. the second instalment of the termination agreement.

19. In continuation, taking into account the severity of the breach and that, however, the second instalment was eventually paid, as well as that the amount of the penalty is more than three times higher than the amount of the second instalment, the DRC judge considered that there are grounds for limiting the total penalty fee of EUR 51,000.

20. In view of the foregoing, the DRC judge considered that the penalty clause contained in the agreement concluded between the parties is disproportionate and not reasonable. Therefore, the DRC judge decided to reduce the penalty to the amount of EUR 3,000 which, in view of the specific circumstances of the case, was considered as a fair and reasonable amount in the present case.

21. With regard to the Claimant’s request for interest of 5% per year on the amount owed, the members of the DRC judge referred to the jurisprudence of the DRC in similar cases and concluded that the Claimant’s request for default interest on the penalty fee must be rejected.

22. Finally, the DRC judge established that any further claim lodged by the Claimant is rejected.

23. Furthermore, taking into account the consideration under number II./4. above, the DRC judge 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.

24. In this regard, the DRC judge 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.

25. Therefore, bearing in mind the above, the DRC judge 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.

26. Finally, the DRC judge 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 DRC judge

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

2. The Respondent, Club C, has to pay to the Claimant the amount of EUR 3,000.

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 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 amount is 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 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.

*****

Note relating to the motivated decision (legal remedy):

According to article 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 DRC judge:

Emilio García Silvero

Chief Legal & Compliance Officer

Encl.: CAS directives