F.I.F.A. – Dispute Resolution Chamber / Camera di Risoluzione delle Controversie – labour disputes / controversie di lavoro (2020-2021) – fifa.com – atto non ufficiale – Decision25 February 2021

Decision of the

Dispute Resolution Chamber

passed in Zurich, Switzerland, on 25 February 2021,

regarding an employment-related dispute concerning the player Luka KUKIC

COMPOSITION:

Geoff Thompson (England), Chairman Stefano Sartori (Italy), member Joseph Antoine Bell (Cameroon), member

CLAIMANT:

LUKA KUKIC, Croatia

Represented by Mr. Ivan Ostojic

RESPONDENT:

KORONA SPOLKA AKCYJNA, Poland

I. FACTS

1. On 30 April 2019, the Croatian player Luka Kukic (hereinafter: the player or Claimant) and the Polish club Korona Spolka Akcyjna (hereinafter: the club or Respondent) signed an employment agreement (hereinafter: the contract), valid between 17 June 2019 and 30 June 2022, as well as amendment dated 30 March 2020.

2. Based on the contract and the amendment, the player was entitled to a monthly salary of EUR 6,240.

3. Art. 6.2 of the contract stipulates the following: ‘To all matters not settled in this contract – agreement, appropriate provisions of the Polish law shall respectively apply especially appropriate regulations of PZPN’.

4. Article 6.4 of the contract holds – in English - the following clause: ‘All disputes matters concerning the validity, existence or termination of the contract are settled by the proper PZPN and FIFA authorities acting in accordance with separate regulations. Property disputes resulting from this contract are submitted to the competence of the Football Arbitration Court acting at PZPN or the competent authority of FIFA’.

5. In Polish, art. 6.4 of the contract reads as follows:

6. Article 6.8 of the contract stipulates that ‘In case of discrepancies, the Polish version of the contract is binding’.

7. Furthermore, art. 8 par. 5 sub c. of the Resolution No. III/54 (27 March 2015) contains the following clause: ‘The Club is entitled to make a unilateral declaration to terminate the Contract for reasons attributable to the Player, through a statement submitted to the Player in writing under the pain of nullity, only in the following cases: […]c. after the Club has been relegated to a lower division as a result of sports competition, provided that the declaration of termination of the Contract is submitted by the 10th day after the end of the given season, the Club does not have any arrears in the payment of the contracted salary towards the Player, and the Club pays compensation to the Player in the amount equivalent to one month's individual salary due to the Player for the professional football contract, unless the parties agree to change the terms of the Contract.’

8. On 6 August 2020, the club unilaterally terminated the contract, according to the player based on ‘article 8 sec. 5 point c) of the Resolution No. III/54 of 27 March 2015 of the Management Board of the Polish Football Association - Minimum Requirements for Standard Player Contracts in the Professional Football Sector (amended by the Resolution No. V/60 of 25 June 2020 of the Management Board of the Polish Football Association on the amendment of the Resolution No. III/54 of 27 March 2015 of the Management Board of the Polish Football Association - Minimum Requirements for ‘Standard Player Contracts in the Professional Football Sector’.

9. On 2 October 2020, the player put the club in default, explaining that he deems that the termination was made without just cause and requesting the payment of the amount of EUR 7,447 as outstanding remuneration and EUR 142,313 as compensation for breach of contract.

10. On 11 November 2020, the player lodged a claim against the club, claiming the following amounts:

Outstanding remuneration in the amount of EUR 7,447, plus 5% interest p.a. as from the respective due dates, broken down as follows:

- EUR 6,240 as the July 2020 remuneration;

- EUR 1,207 as the remuneration between 1 August and 6 August 2020.

Compensation for breach of contract in the amount of EUR 142,313, plus 5% interest p.a. as from the respective due dates, broken down as follows:

- EUR 142,313 as residual value of the contract between 6 August 2020 and 30 June 2022.

11. In his claim, the player explained that the club – in reply to his letter dated 2 October 2020 – denied that the termination was made without just cause.

12. The player is of the opinion he could not know about a possible termination, as the contract did not contain any reference to clause 8 of the Polish Resolution and that even if the clause would be applicable, the club did not follow the deadline prescribed in said article 8.

13. What is more, the player explains that he deems that clause 8 of the Polish Resolution is anyway invalid and cannot be upheld. In this respect, the player refers to a decision passed by the DRC on 7 June 2018, in which the Panel allegedly analysed the validity of said clause of the Polish FA Regulations, and concluded amongst others the following:

 “(...)according to clause 8.5 of the Rules, the Respondent may terminate the contract unilaterally, if “The [the Respondent] is entitled to a unilateral declaration without fault of [the Claimant] (…) after transfer of [the Respondent] to a lower competition class due to sporting competition, provided that notice of termination of the Contract shall be made until 10 July(…).”,

 In this respect, the Chamber were of the opinion that clause 8.5 of the Rules consists in a relegation clause and against such background, the members of the DRC unanimously concurred that a clause of such high importance had to be inserted in the contract itself.

 “What is more, the members of the Chamber deemed that a mere referral to such clause is not sufficient.”

 Furthermore, the Chamber examined the clause and noted that the clause did not fulfil the requirement of reciprocity, as it provides for a unilateral termination right to the benefit of the Respondent only.” , and

 “Therefore, the Chamber decided that the Respondent could not legitimately terminate the contractual relation with the Claimant by making use of clause 8.5 of the Rules and as a consequence, the members of the DRC arrived to the unanimous conclusion that the Respondent did not have just cause to terminate the contract(...)”,

14. In its reply to the claim, the club argued that the player, on 30 April 2019, signed a separate declaration, confirming that he received a copy of the Resolution III./54. According to the club, the player was very well aware of the content of said document.

15. Further, the club explains that on 6 August 2020, the player was informed about the fact that due to the relegation of the club, his contract would be terminated.

16. In addition, the club argued that based on Resolution IV/48 of 12 May 2020, it had until the 10th day after the end of a given to season, to terminate the player’s contract. The club explains that, since the 2019/2020 season was extended to 31 July 2020 and because the contract was terminated on 6 August 2020, the club resected the deadline.

17. Finally, the club confirms that it paid the amounts of EUR 6,240 and EUR 1,248 ‘after deducting insurance contributions and tax’.

18. What is more, the club contests the competence of FIFA, indicating that the Football Court of Arbitration operating at the Polish Football Association should be competent to deal with the matter at hand.

19. The club further argues that, since the Polish version of the contract is leading, the contract is clear that Polish law applies and that the Football Court of the PZPN is competent.

20. The club explains that the Football Court of Arbitration guarantees fair proceedings and respects the principle of equal representation between players and clubs.

21. Additionally, the club also submitted an extract of the Status of the PZPN, the Regulations of the PZPN Football Court of Arbitration and Resolution No. III/54 (27 March 2015) and Resolution IV/48 (12 May 2020) of the Management Board of PZPN.

22. After being invited to do so, the player replied and confirmed to FIFA that the club had paid him an amount of EUR 6,376.07, by means of two payments made on 26 November 2020. According to the player, this means that the club paid his July 2020 remuneration and ‘balance of August 2020’ remuneration, however leaving the compensation in the amount of EUR 142,313 unpaid.

23. Consequently, the player wishes to receive from the club the total amount of EUR 142,313, as well as 5% interest p.a. as from the due date.

24. On 16 September 2020, the player signed a new contract with the Bosnian club FK Sloboda Tuzla, valid for the period between 16 September 2020 and 31 May 2021, based on which he was entitled to receive a monthly amount of BAM 500 (approximately EUR 255). For the overlapping period between 16 September 2020 and 31 May 2021, this corresponds to EUR 4,250.

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 12 November 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.

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 August 2020), the Dispute Resolution Chamber is in principle competent to deal with the matter at stake. The matter concerns an employment-related dispute with an international dimension between a Croatian player and a Polish club.

3. However, the Chamber acknowledged that the Respondent contested the competence of FIFA’s deciding bodies on the basis of clause 6.4 of the employment contract and alleging that the Football Arbitration Court acting at PZPN should be competent to deal with the matter at hand.

4. In this respect, the Chamber emphasised that in accordance with art. 22 lit. b) of the 2012 edition of the Regulations on the Status and Transfer of Players it is competent to deal with a matter such as the one at hand, unless an independent arbitration tribunal, guaranteeing fair proceedings and respecting the principle of equal representation of players and clubs, has been established at national level within the framework of the Association and/or a collective bargaining agreement. With regard to the standards to be imposed on an independent arbitration tribunal guaranteeing fair proceedings, the DRC referred to FIFA Circular no. 1010 dated 20 December 2005. In this regard, the DRC judge further referred to the principles contained in the FIFA National Dispute Resolution Chamber (NDRC) Standard Regulations, which came into force on 1 January 2008.

5. Furthermore, the members of the Chamber observed that the English version of article 6.4 of the employment contract is not exclusive, as it refers to two different deciding bodies, namely the Football Arbitration Court and FIFA. Therefore, the members of the Chamber deemed that said clause could not serve as the basis on which the Football Arbitration Court of the Polish Football Association should be declared the arbitration tribunal competent to decide on the present dispute, since the relevant clause did not contain an exclusive reference granting jurisdiction to said arbitration tribunal.

6. However, the Chamber also noted that art. 6.8 of the contract stipulates that ‘In case of discrepancies, the Polish version of the contract is binding’.

7. Subsequently, the Chamber referred to art. 9 par. 1 lit. e) of the Procedural Rules which stipulates that all documents of relevance to the dispute shall be submitted in the original version as well as translated into one of the official FIFA languages. In this respect, the Chamber noted that noted that the English version of article 6.4 of the contract allegedly does not match with the Polish version of said article, as in the Polish version the word “FIFA” is not mentioned. However, since no explanation or literal translation of said articles was provided, said circumstances cannot be upheld against the Claimant, who had no influence on the drafting and wording of the contract.

8. What is more, the Chamber acknowledged that based on the documents provided by the Respondent, it could not be established with certainty that the Football Arbitration Court complies with the standards of an independent arbitration tribunal guaranteeing equal representation and fair proceedings. The members of the Chamber emphasised that from the documents, it follows from art. 11 par. 1 and art. 11 par. 2 of the respective Regulations, that the Management Board of the PZPN is fully responsible for the appointment and dismissal of the 32 arbitrators elected. What is more, the entities referred to as “league player community” and “Chair of the Court” are not clearly defined. Based on these articles, the Chamber concluded that the election of the Chairman is allegedly not made by consensus and it could not be excluded that the Management Board of the PZPN has decisive influence over the list of arbitrators.

9. As a result, and taking into consideration all of the above circumstances, the Dispute Resolution Chamber concluded that the Respondent’s objection to the competence of FIFA to hear the present dispute has to be rejected, and that the Dispute Resolution Chamber is therefore competent, on the basis of art. 22 b) of the Regulations on the Status and Transfer of Players, to consider the present matter as to the substance.

10. In continuation, the Chamber analysed which regulations 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 2 of the Regulations on the Status and Transfer of Players (August 2020 edition), and considering that the claim was lodged on 12 November 2020, the October 2020 edition of the aforementioned regulations (hereinafter: the Regulations) is applicable to the matter at hand as to the substance.

11. 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.

12. First of all, the members of the Chamber acknowledged that, on 30 April 2019, the Claimant and the Respondent had concluded an employment contract valid as from 17 June 2019 and 30 June 2022.

13. The Chamber further observed that the Claimant lodged a claim in front of FIFA against the Respondent seeking payment of the total amount of EUR 142,313 in respect to compensation for breach of contract, asserting that the Respondent had terminated the contract without just cause on 6 August 2020.

14. Along this Iine, the Chamber noted that the unilateral termination of the contract on 6 August 2020 had remained uncontested by the Respondent however, according to the Respondent, it had just cause to terminate the contract on the basis of clause 8.5 of the Rules.

15. At this stage, the members of the Chamber considered important to highlight that said clause is only included in the so-called Rules, but not in the contract.

16. Having established the aforementioned, the Chamber deemed that the underlying issue in this dispute to determine whether the employment contract had been unilaterally terminated with or without just cause by the Respondent and to determine the financial consequences for the party that is to be held liable for the early termination of the pertinent employment contract.

17. Along this line, the Chamber turned its attention to clause 8.5 of the Rules, which was invoked by the Respondent as the basis of the unilateral termination.

18. In this respect, according clause 8.5 of the Rules, the Respondent may terminate the contract unilaterally as follows: ‘The Club is entitled to make a unilateral declaration to terminate the Contract for reasons attributable to the Player, through a statement submitted to the Player in writing under the pain of nullity, only in the following cases: […] c. after the Club has been relegated to a lower division as a result of sports competition, provided that the declaration of termination of the Contract is submitted by the 10th day after the end of the given season, the Club does not have any arrears in the payment of the contracted salary towards the Player, and the Club pays compensation to the Player in the amount equivalent to one month's individual salary due to the Player for the professional football contract, unless the parties agree to change the terms of the Contract.’

19. In this respect, the Chamber were of the opinion that clause 8.5 of the Rules consists in a relegation clause and against such background, the members of the DRC unanimously concurred that a clause of such high importance had to be inserted in the contract itself. What is more, the members of the Chamber deemed that a mere referral to such clause is not sufficient

20. Furthermore, the Chamber examined the clause and noted that the clause did not fulfil the requirement of reciprocity, as it provides for a unilateral termination right to the benefit of the Respondent only. In particular, it appears that in case of relegation of the Respondent due to Sporting merits, only the Respondent has the right to unilaterally terminate the contract and such right is not granted to the Claimant.

21. Therefore, the Chamber decided that the Respondent could not legitimately terminate the contractual relation with the Claimant by making use of clause 8.5 of the Rules and as a consequence, the members of the DRC arrived to the unanimous conclusion that the Respondent did not have just cause to terminate the contract on 6 August 2020.

22. On account of the above, the Chamber decided that the Respondent had no just cause to unilaterally terminate the contract between the Claimant and the Respondent on 6 August 2020 and that, consequently, the Respondent is to be held liable for the early termination of the employment contact without just cause.

23. Bearing in mind the previous considerations, the Chamber went on to deal with the consequences of the early termination of the employment contract without just cause by the Respondent.

24. First of all, the members of the Chamber concurred that the Respondent must fulfill its obligations as per employment contract up until the date of termination of the contract in accordance with the general legal principle of “pacta sunt servanda”. In this respect, the Chamber however noted that the Claimant confirmed having received all the outstanding remuneration, as an amount of EUR 6,376.07 was paid to him during the course of the proceeding at hand. Consequently, the Chamber decided that no outstanding remuneration is payable to the Claimant.

25. In continuation, 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 any outstanding salaries on the basis of the relevant employment contract.

26. 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.

27. 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 established that no such compensation clause was included in the employment contract at the basis of the matter at stake.

28. Subsequently, and in order to evaluate the compensation to be paid by the Respondent, the members of the Chamber took into account the remuneration due to the Claimant in accordance with the employment contract as well as the time remaining on the same contract, along with the professional situation of the Claimant after the early termination occurred. In this respect, the Chamber pointed out that at the time of the termination of the employment contract on 6 August 2020, the contract was supposed to run until 30 June 2022, in which a total amount of EUR 142,313 were still to be paid. Consequently, taking into account the financial terms of the contract, the Chamber concluded that the remaining value of the contract as from its early termination by the Respondent until the regular expiry of the contract amounts to EUR 142,313 and that such amount shall serve as the basis for the final determination of the amount of compensation for breach of contract.

29. In continuation, the Chamber remarked that following the early termination of the employment contract at the basis of the present dispute the Claimant had found new employment with two clubs.

30. In this respect, the Claimant signed an employment contract with the Bosnian club FK Sloboda Tuzla, valid for the period between 16 September 2020 and 31 May 2021, based on which he was entitled to receive a monthly amount of BAM 500, corresponding to approximately EUR 255). For the overlapping period between 16 September 2020 and 31 May 2021, the Claimant was thus entitled to mitigate his damages with EUR 4,250.

31. Consequently, in accordance with the constant practice of the Dispute Resolution Chamber and the general obligation of the Claimant 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.

32. In view of all of the above, the Chamber decided that the Respondent must pay the amount of EUR 138,063 to the Claimant as compensation for breach of contract without just case, which is considered by the Chamber to be a reasonable and justified amount as compensation.

33. What is more, based on the Chamber’s longstanding jurisprudence, the Chamber decided to award 5% interest p.a. on the amount of EUR 138,063 as from the date of claim, i.e. 12 November 2020.

34. The Dispute Resolution Chamber concluded its deliberations in the present matter by establishing that any further claim lodged by the Claimant is rejected.

35. Subsequently, the Chamber turned its attention to art. 17 par. 1 lit. ii) of the Regulations, according to which a player is entitled to an additional compensation of three monthly salaries, subject to the early termination of the contract being due to overdue payables. In case of egregious circumstances, the additional compensation may be increased up to a maximum of six monthly salaries, whereby the overall compensation may never exceed the rest value of the prematurely terminated contract.

36. With the above in mind, the Chamber however decided to not award the Claimant additional compensation, as the termination of the contract in the matter at hand was not made by the Claimant due to overdue payables, but by the Respondent, because of the relegation of its club.

37. 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.

38. 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.

39. 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.

40. 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, Luka Kukic, is admissible.

2. The claim of the Claimant is partially accepted.

3. The Respondent, Korona Spolka Akcyjna, has to pay to the Claimant, the following amount:

- EUR 138,063 as compensation for breach of contract without just cause plus 5% interest p.a. as from 12 November 2020 until the date of effective payment.

4. Any further claims of the Claimant are rejected.

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

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

7. In the event that the amount due, plus interest as established 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 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 amount is paid.

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

In the event that the payable amount 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).

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