F.I.F.A. – Dispute Resolution Chamber / Camera di Risoluzione delle Controversie – labour disputes / controversie di lavoro (2020-2021) – fifa.com – atto non ufficiale – Decision 13 January 2021

Decision of the

DRC Judge

passed on 13 January 2021

regarding an employment-related dispute concerning the player A

BY:

Jon Newman (USA), DRC Judge

CLAIMANT:

A, Country A

Represented by

RESPONDENT:

B, Country B

Represented

I. Facts

1. On 4 February 2020, the Country A player, A (hereinafter: the Claimant or Player) and the Country B club, B (hereinafter: the Respondent or Club) concluded an employment contract valid as from 1 February 2020 until 30 November 2022 (hereinafter: the Contract).

2. Pursuant to clause 1 of the contract, the Respondent committed itself to pay to the player the following remuneration:

- As from 1 February 2020 until 31 December 2020: a monthly salary of Country B currency (XXX) 28,000;

- As from 1 January 2021 until 30 November 2022: a monthly salary of XXX 32,000.

3. The contract stipulated, inter alia, the following:

“17.1 Dispute arising from this Agreement shall be settled by arbitration in accordance with one of the Country B Football Association’s Board established regulations for Country B Football Association’s arbitration.”

4. Appendix 3 of the contract stipulated the following:

“1. Breaking clause

1.1 If the Player is selected for the 18 man match squad in less than 8 games in Country B competition during the period 2020-04-04 to 2020-06-25 the parties agree that both the Club and the Player can terminate the aforementioned contract at latest 2020-06-30. This shall be done in writing from Club to the Player or from the Player to the Club at latest 2020-06-26. Upon termination of the contract the parties assure that none of them has any claim on the other part. The salary shall be paid until the day of the contract termination.”

5. As per the Claimant, on 25 June 2020, the Respondent unilaterally terminated the contract stating the following:

“With reference to “Appendix 3 – Breaking clause” in our interim agreement, the Club hereby terminates the contract between the parties that started 2020-02-01 and signed 2020-02-04 with immediate effect, which means per 2020-06-25.”

6. On 4 July 2020, the Claimant put the Respondent in default requesting “compensation for the residual value of the contract” in the amount of xxx 904,000. The player provided the Respondent with a 16 days’ deadline to remedy the situation.

7. As regards the “Breaking clause” stipulated under Appendix 3 of the contract, the Claimant maintained the following:

“First of all this clause as such is not valid from a legal point of view.

A cancelation clause can only be valid insofar as the event giving rise to the condition is beyond the control of one of the parties. It is clear that in the present matter the Club as an employer can unilaterally decide if the Player will play or not. So this cancellation clause is a purely potestative clause on behalf of the Club. This makes that there is no legal ground at all to terminate the contract.”

8. Furthermore, the Claimant wished to emphasize the following:

“Notwithstanding the aforementioned clause is null and void – also the condition to trigger the cancelation clause wasn’t be fulfilled. This was impossible given the fact that the start of the Country B competition had to be postponed due to the Corono virus. To apply this “breaking clause” at least a minimum of 8 official competition games were required to evaluate the number of games for which the Player was selected during the period 04/04/2020 to 25/06/2020. The season started on 16 June 2020 and the Player even played in the first of only two official competition games scheduled during this time period. The clause couldn’t be applied by any of the parties due to the postponement of the competition.”

9. On 27 July 2020, the Claimant lodged a claim against the Respondent in front of FIFA, requesting the following:

“The Player is entitled to a monthly salary of 28.000 XXX for the period February until December 2020 and 32.000 XXX for the remaining part of the contract until November 2022. The total outstanding amount as compensation for the residual value of the contract is 904.000 XXX (period 1 July 2020 – 30 November 2022) increased with the legal interests (5%).”

10. In its reply to the claim, the Respondent first maintained that the parties opted in writing for an independent national arbitration tribunal, namely, the Country B Football Association’s arbitrational tribunal.

11. In particular, the Respondent held that paragraph 17 section 1 of the contract, “explicitly states that disputes arising from the contract shall be settled by arbitration in accordance with one of Country B Football Association’s Board established regulations for Country B Football Association’s arbitration. Paragraph 1 of the regulation established by the Country B Football Association’s Board on November 7, 2016, states that disputes shall be settled by the Country B Football Association’s arbitrational tribunal, provided the parties are members of FIFA, UEFA, Country B Football Association or associations within any of the aforementioned organizations”.

12. The Respondent added that the Country B NDRC is independent and has been set up to guarantee fair proceedings and respect the principle of equal representation of players and clubs. In this respect, the club provided a statement issued by the Country B Football Association confirming the NDRC’s compliance with the FIFA’s Regulations.

13. The Respondent further maintained that due to the exceptional circumstances of the Covid-19 pandemic, the football season was considerably delayed and the club therefore made an offer to extend the contract and its breaking clause period to 31 July 2020, in order to give both the club and the player more time to evaluate their collaboration.

14. According to the Respondent, the offer was presented by the club to the player on 24 June 2020 in a meeting between the head coach, xxx, the player and the assistant coaches, xxx and xxx, as well as communicated in writing to the player’s agent on 25 June 2020 and that the proposed extension of the contract was rejected by the player. The rejection of the extension was communicated by the player himself in a meeting with the head coach xxx where the player orally confirmed agreeing to the termination based on the breaking clause.

15. Moreover, the club held that on 25 June 2020, the player left without giving any notice to the head coach or the management of the club, and that the player did not attend trainings and did not respond to any of the contact attempts of the club, including telephone calls, WhatsApp messages and a visit at his apartment.

16. The club added that the mutual termination of the contract was confirmed in writing by a notice sent to the player and a message confirming that the player would sign the termination on 25 June 2020 sent by the player’s agent on the same date.

17. In addition, the club stated that the breaking clause of the player agreement stipulates a mutual termination right as it clearly states that “both the Player and the Club can terminate the aforementioned contract”. The conditions for the termination rights to arise are not one-sided as held by the player. On the contrary, the conditions predominantly rely on the individual performance of the player.

18. The club, in continuation, added that the player’s refusal to extend the terms of the contract and his confirmation of the termination of the contract in the meeting with the head coach were interpreted by the club as clear expression of a decision made by the player to terminate the contract. Furthermore, the player’s actions in the morning of 25 June 2020, i.e. he cleared out his place in the locker room etc., showed clearly his intent to not continue with the club and that it was a mutual decision to terminate the contract. In order to confirm the parties’ mutual termination, and to comply with the requirements stipulated in the parties’ agreement, the club sent a written notice with reference to Appendix 3 of the contract on 25 June 2020.

19. Furthermore, the club stated that the player’s acceptance of the termination was communicated by the player’s agent in a WhatsApp message where he confirmed to the club that the player would sign the termination notice. Therefore, the club held that the required actions were taken within the agreed timeframe and the club is of the opinion that the termination was mutual and in compliance with FIFA’s rules, Country B Football Association’s rules and the parties’ agreement.

20. The Respondent continued by stating that in the event the termination is deemed not to be mutual, the club, due to the Covid-19 pandemic, which has seriously affected the club’s financial conditions, shall be exempted from any liability given that the essential conditions under which the contract was concluded are no longer present and the injured party cannot in good faith be expected to continue the employment relationship.

21. Moreover, the club affirmed that the player has on repeated occasions failed to fulfil his obligations under paragraph 2 section 1 of the contract. According to said paragraph, the player had an obligation to attend club’s operations, including trainings and meetings unless he is “…at the impediments of significant risks due to illness, serious family matters or other circumstances over which the player has no control, or for another reason constitutes apologetic reasons”. Furthermore, according to par. 15 of the contract, the club may immediately terminate the contract if the player makes a significant breach of his obligations under the player agreement and claim damages. In this regard, as of 25 June 2020, the player has not participated in any of club’s operations, including practices and meetings.

22. Finally, the club stated that “In the event it should be held that the parties have not reached any mutual agreement to terminate the Player agreement, as is held by the Player but disputed by B, and that it should be held that there are no justifiable grounds for a unilateral termination, then termination shall be deemed be incomplete and invalid, with the effect that the Player agreement is still in force and that the claim brought forward by the Claimant therefore shall be dismissed on this ground.”

23. In view of the above, the club request for relief was the following:

a) “reject the claims of the Player based on lack of jurisdiction, or

b) firstly dismiss the claims based on the abovementioned facts, evidence and circumstances, or secondly in the event the termination is deemed invalid, rule that the Player agreement is still in force and dismiss the Claimant’s claim, and

c) rule that the Player shall bear the costs for the proceedings, and

d) rule that the Player shall bear B’s legal fees and other expenses incurred in connection with the proceedings before FIFA PSD and DRC.”

II. Considerations of the DRC Judge

1. First of all, the DRC Judge analysed whether he was competent to deal with the case at hand. Taking into account the wording of art. 21 of the 2021 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 Judge referred to art. 3 par. 1 of the Procedural Rules and emphasised 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, the DRC Judge is in principle competent to deal with matters which concern employment-related disputes with an international dimension between players and clubs. Therefore, it would be competent to deal with a matter concerning a Country A player and a Country B club.

3. However, in relation to this, the DRC Judge noted that the Respondent considered that the matter shall be decided by the Country B Football Association arbitrational tribunal in view of the contents of clause 17.1 of the contract, which stipulate the following:

“17.1 Dispute arising from this Agreement shall be settled by arbitration in accordance with one of Country B Football Association’s Board established regulations for Country B Football Association’s arbitration.”

4. Taking into account all the above, the DRC Judge emphasized that in accordance with art. 22 lit. b) of the Regulations on the Status and Transfer of Players he 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 Judge referred to the FIFA Circular no. 1010 dated 20 December 2005. Equally, he referred to the principles contained in the FIFA National Dispute Resolution Chamber (NDRC) Standard Regulations, which came into force on 1 January 2008.

5. Equally, the DRC Judge reminded the parties of the contents of art. 12 par. 3 of the Procedural Rules, according to which “any party claiming a right on the basis of an alleged fact shall carry the burden of proof”.

6. In application of the aforementioned provision, the DRC Judge understood that, in the matter at stake, it is up to the Respondent to prove that the Country B NDRC effectively guarantees fair proceedings and respects the principle of equal representation of players and clubs.

7. In this respect, and after observing the evidence provided by the parties, the DRC Judge noted that the Respondent did not provide any evidence on the effective and actual composition of the Country B NDRC, or that said body effectively guarantees fair proceedings and respects the principle of equal representation of players and clubs.

8. Moreover, the DRC Judge established that art. 17.1 of the contract does constitute a clear and exclusive jurisdiction clause in favour of the Country B NDRC.

9. In view of the above, the DRC Judge arrived to the conclusion that, from the evidence on file that was gathered within the course of the present investigation, he cannot follow the Respondent’s arguments as to his lack of jurisdiction. The DRC Judge is, therefore, competent to hear the present matter in accordance with art. 22 b) of the Regulations on the Status and Transfer of Players.

10. Subsequently, the DRC Judge 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 Player (edition June 2020), and considering that the present claim was lodged on 27 July 2020, the June 2020 edition of said regulations (hereinafter: the Regulations) is applicable to the matter at hand as to the substance.

11. Once he established his competence and the regulations applicable to the present matter, the DRC Judge entered into the merits of the dispute. In this respect, he started by acknowledging all the above-mentioned facts as well as the arguments and the documentation on file. However, the DRC Judge emphasised that in the following considerations he will refer only to the facts, arguments and documentary evidence, which it considered pertinent for the assessment of the matter at hand.

12. In this respect, the DRC Judge recalled that the parties concluded an employment contract valid as from 1 February 2020 until 30 November 2022, according to which the player was entitled to a monthly salary of XXX 28,000 as from 1 February 2020 until 31 December 2020 and XXX 32,000 for the period as of 1 January 2021 until 30 November 2022.

13. Subsequently, the DRC Judge observed that the Claimant lodged a claim before FIFA for breach of contract without just cause, arguing that the Respondent unilaterally terminated the contract on 25 June 2020, claiming an amount of XXX 904,000, plus 5% interest.

14. Conversely, the DRC Judge noted that, according to the Respondent, the “Breaking clause” of the contract stipulates a mutual termination right as it clearly states that “both the Player and the Club can terminate the aforementioned contract” and added that the conditions for the termination rights to arise are not one-sided as sustained by the player, on the contrary, the conditions predominantly rely on the individual performance of the player.

15. In view of the above, the DRC Judge considered that the legal issue at stake is to determine whether the relevant employment contract had been unilaterally terminated without just cause by the Respondent on 25 June 2020 and, in the affirmative, which would be the potential consequences of said termination.

16. In this respect, the Chamber was eager to emphasize that only a breach or misconduct which is of a certain severity justifies the termination of a contract. In other words, only when there are objective criteria which do not reasonably permit to expect a continuation of the employment relationship between the parties, a contract may be terminated prematurely. Hence, if there are more lenient measures which can be taken in order for an employer to ensure the employee’s fulfillment of his contractual duties, such measures must be taken before terminating an employment contract. A premature termination of an employment contract can only ever be an ultima ratio measure.

17. With this idea in mind, the DRC Judge focused his attention on the “Breaking clause” stipulated under Appendix 3 of the contract and deemed that, in view of the parties’ stance, the first question that it needed to address was the nature of this clause. In this respect, contrary to the position of the Respondent, the DRC Judge was of the opinion that said clause is evidently a clause granting the Respondent the right to unilaterally terminate the contract “If the Player is selected for the 18 man match squad in less than 8 games in Country B competition during the period 2020-04-04 to 2020-06-25 the parties agree that both the Club and the Player can terminate the aforementioned contract at latest 2020-06-30. (…)”. In this respect, the DRC Judge wished to point out that the decision on the lining-up of a player in a match is normally left fully to the discretion of the club. As such, the player had no influence on the question of whether or not he would be fielded in a specific number of matches in the relevant season.

18. In this context, the DRC Judge highlighted that, in general, potestative clauses, i.e. clauses that contain obligations which fulfilment are conditional upon an event that one party entirely controls, can in general not be applied, since they limit the rights of the other contractual party in an excessive manner and lead to an unjustified disadvantage of the latter towards the other.

19. Along those lines, the DRC Judge considered that said clause cannot be taken into consideration due to its potestative nature. Indeed, as previously mentioned, the club totally controlled the fielding of the player and therefore, only the club was in a position to decide whether or not to terminate the contract.

20. Having taken into account the previous considerations, the DRC Judge decided that the aforementioned clause of the contract does not constitute a reason that can be validly invoked, to unilaterally terminate the contract. As a result of the foregoing, the DRC Judge came to the conclusion that, by means of its letter dated 25 June 2020, the club terminated the contract with the player without just cause.

21. In continuation, having established that the Respondent is to be held liable for the termination of the contract with just cause by the Claimant, the DRC Judge decided that, in accordance with art. 17 par. 1 of the Regulations, the club is liable to pay compensation to the player.

22. In this respect, the DRC Judge focused its attention on the calculation of the amount of compensation for breach of contract in the case at stake. In doing so, the DRC Judge 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.

23. In application of the relevant provision, the DRC Judge 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 DRC Judge established that no such compensation clause was included in the employment contract at the basis of the matter at stake.

24. As a consequence, the DRC Judge determined that the amount of compensation payable by the club to the player had to be assessed in application of the other parameters set out in art. 17 par. 1 of the Regulations. The DRC Judge 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 DRC judge emphasised beforehand that each request for compensation for contractual breach has to be assessed by the DRC Judge on a case-by-case basis taking into account all specific circumstances of the respective matter.

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

26. Bearing in mind the foregoing, the DRC Judge proceeded with the calculation of the monies payable to the player under the terms of the employment contract as from its date of termination without just cause, i.e. 25 June 2020 until 30 November 2022, and concluded that the Claimant would have received in total XXX 904,000 (corresponding to the residual value of the contract, as of July until December 2020 - 6 months* XXX 28,000 - plus as of January 2021 until November 2022 -23 months* 32,000). Consequently, the DRC Judge concluded that the amount of XXX 904,000 serves as the basis for the final determination of the amount of compensation for breach of contract in the case at hand.

27. In continuation, the DRC Judge 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.

28. In this respect, the Chamber verified that the player did not conclude any new contract afterwards.

29. Consequently, on account of all of the above-mentioned considerations, the DRC Judge decided to partially accept the player’s claim and that the club must pay the amount of XXX 904,000 as compensation for breach of contract in the case at hand.

30. In addition, taking into account the Claimant’s request as well as the constant practice of the Dispute Resolution Chamber in this regard, the DRC Judge decided that the Respondent must pay to the Claimant interest of 5% p.a. on the aforementioned amount as of the date of the claim, i.e. 27 July 2020, until the date of effective payment.

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

32. Furthermore, taking into account the previous considerations, 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.

33. 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.

34. Therefore, bearing in mind the above, the DRC Judge 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.

35. 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 amount, in accordance with art. 24bis par. 3 of the Regulations.

III. Decision of the DRC Judge

1. The claim of the Claimant, A, is admissible.

2. The claim of the Claimant is partially accepted.

3. The Respondent, B, has to pay to the Claimant, the following amount:

- XXX 904,000 as compensation for breach of contract without just cause plus 5% interest p.a. as from 27 July 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 DRC Judge:

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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