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 4 June 2020

Decision of the

Dispute Resolution Chamber

passed on 4 June 2020,

in the following composition:

Clifford Hendel (USA/France), Deputy Chairman

Elvis Chetty (Seychelles), member

Tomislav Kasalo (Croatia), member

on the claim lodged by the player,

Mr Jeon Hyoseok, Korea Republic,

represented by Messrs Menno Teunissen and Thomas Spee

as Claimant

against the club,

Perak Football Association, Malaysia

as Respondent

regarding an employment-related dispute

between the parties

I. Facts of the case

Contractual basis

1. On 5 December 2019, the club, Perak Football Association (hereinafter: the club or the Respondent) offered the player, Jeon Hyoseok (hereinafter: the player or the Claimant) a contract of employment as professional football player (hereinafter: letter of offer).

2. The letter of offer stipulated the following:

“2. On behalf of Football Association of Perak Darul Ridzuan (PAFA), I am delighted to offer the Player a contract as a Professional Football Player representing PAFA Football Team in the Malaysia Super League upon the terms and conditions herein contained.

3. The offer is conditional subject to compliance of the following terms:

3.1. The Player has passed the Medical Examination and Fitness Test conducted by Medical and Fitness Specialist in Malaysia approved by PAFA including Field Trials. […]”

“4. The Medical Examination and Fitness Test shall be conducted in Malaysia within fourteen (14) days form the date hereof.”

“6. The basic terms of the offer of contract are as follows:

6.1 Tenure:

First Year 2020. One (1) year from 16th December 2019 to 30th November 2020 subject to an agreed extension period or an early termination of contract.”

“6.2.1 Salary 2020:

First Year 2020. USD 10,000 (USD Ten Thousand) Only per month subject to deduction of Advanced Salary.”

[…]

6.3 Advanced Salary:

USD 20,000 (USD Twenty Thousand) Only payable upon receipt of the Player’s International Transfer Certificate (ITC).

[…]

6.5 Agent Fees:

USD 10,000 (USD Ten Thousand) Only payable upon receipt of the Player’s International Transfer Certificate (ITC).

[…]

6.6.1 Accomodation:

A fully Furnished House / Apartment will be provided.

6.6.2 Car:

A car will be provided.

6.6.3 Flight Tickets:

Flight tickets economy class for the Player from hometown at the beginning of each season and flight tickets economy class to hometown at the end of each season for the Player.”

“7.7 PAFA has the absolute right to terminate the Player’s Contract on the grounds of poor performance and commitment by the Player during training and matches with a written notice despite the Provision of Article 4, Article 5 and Article 8 of the Player’s Contract and with a full and final compensation of one (1) month salary payable to the Player upon termination”.

3. On an unspecified date, the player accepted the offer by sending the club a “letter of acceptance”.

Overview of the case

4. On an unspecified date, the Respondent sent the Claimant an unsigned copy of the employment contract (hereinafter: the contract) which was signed by the player on 13 December 2019.

5. The contract included all the elements of the letter of offer, however, specifying in more details the following:

“SCHEDULE D – SPECIAL TERMS AND CONDITIONS

The special terms and conditions that have been agreed by the Club and the Player without prejudice to and which shall prevail over other terms and conditions of the Contract:

a). This Contract is conditional subject to compliance of the following terms:

i) The Player has passed the Medical Examination and Fitness Test conducted by Medical and Fitness Specialist in Malaysia approved by the Club including Field Trials prior to commencement of Season 2020.

ii) The Player has produced the latest Medical Records which shows the Player does not have any serious previous injury.

iii) The Club may request the Player to undergo further Medical Examination and Fitness Test at any time the Club thinks fit and necessary.

iv) The Player shall not have any current contract with other employer/ club and if so, the Player has produced a copy of current Player’s Contract and a Release Letter by the current employer/ club.

b) In the event that the Player shall fail to comply with any of the conditional terms as stated above then the Club shall have absolute right to immediately terminate this Contract without any compensation to the Player or to the Agent.

[…]

k) The Club has the absolute right to terminate this Contract without any compensation the Player or to the Agent by a seven (7) days written notice despite the provision of Article 4, Article 5 and Article 8 of this Contract if it is found any of the followings:

i) The player continues with the committed Indiscipline Actions after being served the Second Notice under Clause (j) above.

ii) The Player has an injury which disables the player to play for three (3) consecutive months.

iii) The Player had previous injury which was not revealed to the Club upon signing of the player’s Contract.

iv) The Player breach of any of the terms and conditions of the Contract.

v) The Player breaches any rules and regulations of the Club, FAM, FIFA and other relevant authorities including the laws of Malaysia.”

6. On 13 January 2020, the Respondent informed the Claimant about the termination of the employment relationship. By means of said letter, the club sustained that the player had “failed the Medical Examination and Fitness Test which was conducted twice on 13th December 2019 and 7th January 2020 due to your injury stated in the Medical Report”.

7. Furthermore, the club indicated the following: “we hereby revoke the Letter of Offer”.

Positions of the parties

8. On 17 February 2020, the player lodged a claim in front of FIFA requesting the following:

“- Find that Perak FA has breached the employment contract and terminated the contract of Mr. Jeon Hyoseok without just cause;

- To Order Perak FA to pay Mr Jeon Hyoseok the sum of 172.500,00 USD net of all taxes;

- Find that the breach of employment by Perak FA had an egregious nature and order Perak FA to pay an additional compensation of 30.000,00 USD.

- In accordance with Article 17 para 4 of the RSTP, 2019 edition, ban the club from registering any new player, either nationally or internationally, for 2 entire and consecutive registration periods.

- To award interest calculated at 5% p.a. on the amount requested for payment arrears from the day the payment was due, until the day these sums are effectivel paid;

- To award interests calculated at 5% p.a. on the amount requested for compensation from the day current claim was lodged, until the day the sums are effectively paid;

- Order the Claimant to bear the legal fees and costs incurred by the Respondent in relation to this matter.”

9. In his claim, the player specified that he is entitled to the following amounts:

- Singing fee: USD 20,000

- 12 months’ salary in the total amount of USD 120,000

- Agent fee: USD 10,000

- Transport and housing: USD 12,000

- Flight tickets: USD 1,500.

10. Furthermore, the Claimant maintained that the Respondent violated art. 14 RSTP and terminated his contract without just cause.

11. In this context, the Claimant further maintained that “a player’s contract cannot be terminated based on the circumstance that the player was injured, most notably where such injury was sustained in the course of offering his services to the club”.

12. In its reply, the club rejected the player’s claim. It deemed that the contract was only conditional upon a successful medical examination.

13. In this respect, the club argued that the player explicitly agreed to that by signing the “letter of offer” and the employment contract, which the club pointed out, was only signed by the player and given to him upon his request and because the club “believed that the player was medically fit and had the ability”.

14. In this context, the club argued that the player did not pass his medical examination and therefore, “the club had no other option but to revoke the decision to offer the Player’s Contract to the player”.

15. Moreover, the club claimed that in accordance with art. 7.7 of the letter of offer and Schedule D of the contract, the club had the right to terminate the contract without any compensation to the Player or Agent.

16. Finally, the club deemed that it provided the player with a flight ticket to Malaysia, “accommodation and transport”

17. Upon being requested to do so, the player informed FIFA that on 24 February 2020, he signed an employment contract with the South Korean club, Chuncheon Citizen FC, valid as from 24 February 2020 until 30 November 2020, according to which the player was entitled to, inter alia, KRW (South-Korean Won) 1,700,000 per month (approx. USD 1,426)

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 case at hand. In this respect, it took note that the present matter was submitted to FIFA on 17 February 2020. 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 (cf. article 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 March 2020), 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 South Korean player and a Malaysian club.

3. Furthermore, the Chamber analysed which regulations should be applicable as to the substance of the matter. In this respect, the Chamber confirmed that in accordance with art. 26 par. 1 and 2 of the Regulations on the Status and Transfer of Players (edition March 2020), and considering that the claim was lodged on 17 February 2020, the January 2020 edition of the aforementioned 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. 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. In particular, the Chamber recalled that, in accordance with art. 6 par. 3 of Annex 3 of the Regulations, FIFA may use, within the scope of proceedings pertaining to the application of the Regulations, any documentation or evidence generated or contained in the TMS.

5. 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, bearing in mind art. 12 par. 3 of the Procedural Rules, in accordance with which any party claiming a right on the basis of an alleged fact shall carry the burden of proof.

6. First of all, the members of the Chamber acknowledged that, on 5 December 2019, the player and the club had signed the letter of offer, according to which the player was offered a contract valid as from 16 December 2019 until 30 November 2020, pursuant to which the club undertook to pay to the player the remuneration, as established in point I.2. above.

7. Furthermore, the members of the DRC took note of the fact that, on an unspecified date, the club provided the player with an unsigned copy of an employment contract which the player signed on 13 December 2019.

8. In addition, the Chamber observed that on 13 January 2020 the club revoked the letter of offer due to the player’s failed medical examination.

9. Moreover, the DRC took note that, according to the player, the club terminated the contract without just cause.

10. Subsequently, the members of the DRC took note that the club, for its part, acknowledged that it provided the player with the letter of offer and an unsigned copy of the employment contract, however, according to both documents the employment relationship was conditional upon a successful medical examination.

11. Moreover, the Chamber acknowledged the Respondent’s arguments that in accordance with art. 7.7 of the letter of offer and Schedule D of the contract, the Respondent had the right to terminate the contract without any compensation to the Player or Agent.

12. In view of the aforementioned considerations, the members of the Chamber highlighted that the underlying issue in this dispute, considering the diverging position of the parties, was to determine whether the parties entered into a valid and binding contract and, in the affirmative, if the Respondent had just cause to terminate such contract on 13 January 2020.

13. In this regard, the Chamber began to analyse whether a legally binding employment contract had actually been concluded by and between the Claimant and the Respondent.

14. In this respect, the Chamber recalled that, in order for an employment contract to be considered as valid and binding, apart from the signature of both 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. After a careful study of the contract signed between the parties, the Chamber concluded that all such essential elements are included in the pertinent document, in particular, the fact that the contract establishes that the Claimant is entitled to receive remuneration in exchange for his services to the Respondent as a player.

15. In that context, the Chamber was eager to refer to art. 18 par. 4 of the Regulations, which stipulates that “the validity of a contract may not be made subject to a positive medical examination and/or the granting of a work permit”.

16. On account of all of the above, the members of the Chamber concluded that, by having signed the letter of offer containing all the essentialia negotii, the parties indeed established between them a valid and binding employment contract and are, therefore, bound by the terms of the contract concluded between them.

17. Having established that a valid and legally binding employment contract had been in force between the Claimant and the Respondent, the Chamber went on to analyse whether the Respondent terminated the contract on 13 January 2020, with or without just cause.

18. In this regard, the Chamber recalled that the Respondent argued that the player failed the Medical Examination and that even if an employment was validly concluded, the Respondent would have been entitled to terminate the contract in accordance with art. 7.7 of the letter of offer, which stipulates that “PAFA has the absolute right to terminate the Player’s Contract on the grounds of poor performance and commitment by the Player during training and matches with a written notice despite the provision of Article 4, Article 5 and Article 8 of the Player’s Contract and with a full and final compensation of three (3) month salary payable to the Player upon termination”.

19. In this respect, the Chamber held that it could not accept article 7.7 as being valid, as it provides for a unilateral termination right to the benefit of the Respondent. In addition to the unilateral character of art. 7.7 of the contract, the application of said article appears to be linked to the Claimant’s medical condition, which, in accordance with the Chamber’s constant jurisprudence, in itself cannot be considered a valid reason to terminate an employment contract. Therefore, the Chamber decided that neither the articles in Schedule D of the contract nor art. 7.7 of the letter of offer could legitimately be invoked to terminate the contractual relation with the Claimant. Consequently, the Chamber rejected the Respondent’s argument in this respect.

20. For the sake of completeness, the members referred to the DRC’s longstanding jurisprudence, according to which the responsibility to conduct the necessary medical examinations prior to the signing of an employment contract is incumbent on the Respondent which, consequently, has the obligation to implement the terms of the contract and cannot unilaterally question the validity of the contract during its course, based on the physical state of the player.

21. In view of the aforementioned considerations, the Chamber rejected the arguments of the Respondent and concluded that, on 13 January 2020, the Respondent terminated the contract without just cause.

22. Having established that the club is to be held liable for the early termination of the employment contract, the DRC focused its attention on the consequences of such termination.

23. First of all, the members of the Chamber concurred that the club 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 club is liable to pay to the player the remuneration that was outstanding at the time of the termination i.e. the amount of USD 20,000, consisting of the advanced salary.

24. Moreover, the Chamber wished to highlight, that according to the wording of art. 6.1 of the letter of offer, i.e. “First Year 2020” and “Salary 2020”, the Claimant was not entitled to receive a monthly salary in the amount of USD 10,000 for December 2019.

25. Furthermore, considering the player’s claim for interest and also taking into account the DRC’s longstanding jurisprudence, the DRC ruled that the Respondent must pay 5% interest on the amount of USD 20,000 as from the first day after the termination of the contract, i.e. as from 14 January 2020.

26. In continuation, the DRC focused its attention on the calculation of the amount of compensation for breach of contract in the case at stake. In doing so, 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 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.

27. In application of the relevant provision, the DRC held that it first of all had to clarify as to whether the pertinent employment contracts 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 members of the DRC already established that art. 7.7 of the letter of offer cannot be considered as valid.

28. As a consequence, the members of the DRC 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. The DRC recalled that said provision provides for a non-exhaustive enumeration of criteria to be taken into consideration when calculating the amount of compensation payable. Therefore, other objective criteria may be taken into account at the discretion of the deciding body. In this regard, the Chamber emphasised beforehand that each request for compensation for contractual breach has to be assessed by the DRC on a case-by-case basis taking into account all specific circumstances of the respective matter.

29. The DRC then turned its attention to the remuneration and other benefits due to the Claimant under the existing contract and/or the new contract, which criterion was considered by the Chamber to be essential. The DRC deemed it important to emphasise that the wording of art. 17 par. 1 of the Regulations allows the DRC to take into account both the existing contract and the new contract, if any, in the calculation of the amount of compensation.

30. 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 as from the date of termination with just cause by the Claimant until its natural expiration, bearing in mind that he would have received in total USD 120,000 as remuneration for the period as from January 2020 until November 2020, corresponding to USD 110,000 as salary and USD 10,000 as “Agent Fee”. Consequently, the Chamber concluded that the amount of USD 120,000 serves as the basis for the final determination of the amount of compensation for breach of contract in the case at hand.

31. In this respect, the Chamber wished to point out that the letter of offer did not stipulate whether the “Agent Fee” shall be paid directly to the agent or the player and since the agent did not sign the letter of offer, such amount shall be due to the player. In addition, the DRC noted that the Respondent failed to provide any evidence that it paid the player the flight ticket to Malaysia.

32. In continuation, the members of the DRC 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 art. 17 par. 1 lit. ii) of the Regulations as well as 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.

33. In this respect, the DRC recalled that the Claimant had found new employment with the South Korean club, Chuncheon Citizen FC, as from 24 February 2020 until 30 November 2020, providing for a monthly salary of KRW (South Korean Won) 1,700,000, leading to total value for the period corresponding to the time remaining on the prematurely terminated contract of KRW 15,603,571, which is approx. USD 13,100, which shall be deducted from the above-mentioned residual value. As a result, the DRC established that the “Mitigated Compensation” amounts USD 106,900.

34. Consequently, on account of the above-mentioned considerations, the Chamber decided to partially accept the Claimant’s claim and held that the Respondent must pay the amount of USD 106,900 as compensation for breach of contract to the Claimant. Equally, with regard to the Claimant’s claim pertaining to flight tickets and on the basis of the information provided by FIFA Travel and referring to art. 6.6 of the letter of offer, the Chamber decided that the Respondent must pay to the Claimant the amount of CHF 710 for the flight ticket from Malaysia to South Korea.

35. Furthermore, taking into account the consideration under number II./3. 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.

36. 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.

37. 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.

38. Finally, the Chamber 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.

39. The DRC concluded its deliberations by rejecting any further claim of the Claimant.

III. Decision of the Dispute Resolution Chamber

1. The claim of the Claimant, Jeon Hyoseok, is partially accepted.

2. The Respondent, Perak Football Association, has to pay to the Claimant outstanding remuneration in the amount of USD 20,000, plus 5% interest p.a. as from 14 January 2020 until the date of effective payment.

3. The Respondent has to pay to the Claimant compensation for breach of contract in the amount of USD 106,900 and CHF 710, plus 5% interest p.a. on the amount of USD 106,900 as from 17 February 2020 until the date of effective payment.

4. Any further claim of the Claimant is rejected.

5. 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 amounts mentioned under points 2. and 3. above.

6. The Respondent shall provide evidence of payment of the due amount in accordance with points 2. and 3. 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).

7. In the event that the amounts due plus interest in accordance with points 2. and 3. 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 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).

8. The ban mentioned in point 7. above will be lifted immediately and prior to its complete serving, once the due amounts are paid.

9. In the event that the aforementioned sums plus interest are 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 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

e-mail: info@tas-cas.org

For the Dispute Resolution Chamber:

Emilio García Silvero

Chief Legal & Compliance Officer