TAS-CAS – Tribunale Arbitrale dello Sport – Corte arbitrale dello Sport (2004-2005)———-Tribunal Arbitral du Sport – Court of Arbitration for Sport (2004-2005) – official version by www.tas-cas.org – Arbitration CAS 2004/A/780 Christian Maicon Henning v. Prudentopolis Esporte Clube & Fédération Internationale de Football Association (FIFA), order of 6 January 2005 Football Request for provisional and conservatory measures General conditions for staying the execution of a decision Chances of success Irreparable harm Balance of interests Stay of a financial decision Provision of security for provisional measures

Tribunal Arbitral du Sport - Court of Arbitration for Sport (2004-2005) - official version by www.tas-cas.org - Arbitration CAS 2004/A/780 Christian Maicon Henning v. Prudentopolis Esporte Clube & Fédération Internationale de Football Association (FIFA), order of 6 January 2005 Football Request for provisional and conservatory measures General conditions for staying the execution of a decision Chances of success Irreparable harm Balance of interests Stay of a financial decision Provision of security for provisional measures 1. According to the CAS jurisprudence, as a general rule, when deciding whether to stay the execution of the decision appealed from, it is necessary to consider whether the measure is useful to protect the Appellant from irreparable harm, the likelihood of success on the merits of the appeal and whether the interests of the Appellant outweigh those of the opposite party. It is necessary to compare the risks incurred by the Appellant in the event of immediate execution of the decision with the disadvantages for the Respondent in being deprived from such execution (so-called balance of convenience or interests). The Appellant must make at least a plausible case that the facts relied on by him and the rights which he seeks to enforce exist and that the material conditions for a legal action are fulfilled. 2. If the resolution of the issues at stake depend upon an assessment of all the evidence, which can only sensibly be undertaken at the full hearing of the case, the Appellant’s chances of success are prima facie reasonable in the sense that they cannot be definitely discounted. 3. For a player, to be denied the opportunity to play during four months would cause him damage irreparable if the Panel to be appointed were eventually to find that the suspension should be set aside. In any event, a – possibly controversial – claim for compensation against the club is no complete remedy for the player, as it is doubtful under which law such compensation should be sought for. 4. As to the balance of convenience or interests, the deterrent effect of a sanction is not undermined if its imposition is merely postponed and not cancelled. The risks incurred by a player in the event of immediate execution of a disciplinary sanction thus outweigh the disadvantages for FIFA in being deprived from such execution. 5. To execute and enforce a financial decision, the assistance of the competent official state authorities is needed. However, as such a decision cannot be enforced when an appeal is pending, there is no need and no legal basis to stay it. 6. Art. R37 of the Code provides that provisional and conservatory measures can be made conditional upon the provision of security. This may only concern the stay of a disciplinary sanction as, the monetary sanction, being unenforceable, may not be stayed and the payment may not be ordered as a provisional measure. In any event, in accordance with Swiss law, only a judge responsible for the enforcement of claims can make freezing orders, which orders cannot be made by ordinary civil courts or arbitral tribunals. Mr Christian Maicon Henning (the Appellant) is a Brazilian professional football player who was born on 25 August 1978. Prudentópolis Esporte Clube (Prudentópolis) is a Brazilian football club playing in the Brazilian championship. The Appellant and the German football club Eintracht Frankfurt have signed an employment contract for a period from 1 September 2003 until 30 June 2004. During such period, the Appellant was registered as a professional football player in Germany. On 9 August 2004 the Appellant signed an employment contract with Prudentópolis for a period from 9 August 2004 until 9 September 2008. The Brazilian Football Federation requested on 19 August 2004 the German Football Association to issue the international registration transfer certificate for the Appellant. On 30 August 2004 the Appellant requested FIFA to be allowed to keep playing for Eintracht Frankfurt, with which he had signed a new contract valid from 1 July 2004 until 30 June 2006. On 22 September 2004 Prudentópolis turned to FIFA applying that the latter declares that the Appellant had unilaterally breached the employment contract concluded on 9 August 2004. It also requested that the Appellant be ordered to pay a contractual penalty of BRL 13,000,000 and be imposed the sportive sanctions provided by the FIFA Regulations for the Status and Transfer of Players. On 26 November 2004 the FIFA Dispute Resolution Chamber issued a decision (the Decision), whereby the Appellant was ordered to pay USD 300,000 to Prudentópolis and was imposed a suspension of four months from participating to any official football match from the date of the notification of the Decision. On 17 December 2004 the Appellant appealed from the Decision with the Court of Arbitration for Sport (CAS). He applied, by way of urgent interim relief, to the stay of the Decision, in particular item no. 4 related to the suspension imposed on the Appellant. He argued that such suspension would seriously harm his career as a professional football player and that he would be facing the loss of his regular position with Eintracht Frankfurt and of any expected premiums, namely EUR 500 for each point won in the course of the season. The Appellant further submits that he would lose his job with Eintracht Frankfurt, which would have to hire a substitute player during the period of the Appellant’s suspension. The Appellant concludes that should the Decision not be stayed, his appeal rights would be rendered nugatory. He adds that “a stay of execution is urgently required both to preserve the Appellant appeal rights and to strike the right balance of interests pending the outcome of this appeal”. On 23 December 2004 the Appellant lodged his appeal brief and confirmed his application to stay the execution of the Decision, for the same reasons mentioned in his statement of appeal. By fax of 27 December 2004, Counsel for Prudentópolis lodged with CAS a submission regarding the application to stay the Decision. Basically, Prudentópolis applied for the dismissal of the Appellant’s application. Subsidiarily, should such stay of execution be ordered, Prudentópolis requests that the Appellant be ordered to make a payment of USD 300,000 to a CAS escrow account as security, in accordance with the CAS jurisprudence CAS 2004/A/689. On 28 December 2004 the CAS Court Office acknowledged receipt of Prudentópolis’s opinion regarding the stay of execution of the Decision. It invited the Appellant and FIFA to express their respective opinions with respect to the payment to a CAS escrow account of a security amounting to USD 300,000. Per fax of 30 December 2004, FIFA filed with CAS its own opinion regarding the application to stay the Decision. Basically, FIFA applied to the dismissal of the application for a stay. Subsidiarily, it submits that “[o]nly for the unlikely event that the CAS should accept the relevant application, we would support the demand of the other Respondent, and would request that the Appellant should at least be instructed to pay the amount of USD 300’000 into a CAS escrow account”. LAW CAS Jurisdiction 1. The jurisdiction of CAS, which is not disputed, derives from art. 59 ff. of the FIFA Statutes and art. R47 of the Code of Sports-related Arbitration (the “Code”). 2. It follows that the CAS has jurisdiction to decide on the present dispute. Admissibility 3. The Appellant filed his statement of appeal within the time limit of 10 days provided by art. 60 of the FIFA Statutes. The statement of appeal complies with all other requirements of the FIFA Statutes and of art. R48 of the Code. 4. It follows that the present appeal is admissible. Applicable law 5. Art. R58 of the Code provides the following: “The Panel shall decide the dispute according to the applicable regulations and the rules of law chosen by the parties or, in the absence of such a choice, according to the law of the country in which the federation, association or sports-related body which has issued the challenged decision is domiciled or according to the rules of law, the application of which the Panel deems appropriate. In the latter case, the Panel shall give reasons for its decision.” 6. Art. 59 par. 2 of the FIFA Statutes further provides for the application of the various regulations of FIFA or, if applicable, of the Confederations, Members, Leagues and clubs, and, additionally, Swiss law. 7. In the present matter, the parties have not agreed on the application of any particular law. Therefore, the rules and regulations of FIFA shall apply primarily and Swiss law shall apply subsidiarily. Application for a stay of the disciplinary measure 8. The Appellant has applied to stay the Decision, in particular the disciplinary decision. Accordingly, the Appellant also applies for the stay of both the financial and disciplinary aspects of the decision rendered by FIFA. 9. First the Appellant has applied for a stay of the suspension of four months imposed on him. Such application is dealt with as request for provisional and conservatory measures and in accordance with art. R37 of the Code. 10. The Decision states: With regard to the sports sanctions, the deciding body referred to art. 23 par 1 (a) of the Regulations and stated that, as a general rule and in strict application of the relevant provision, the player, Christian Maicon Henning, should be suspended for a period of four months from participating in any official football match. However, the DRC stated that, fundamentally, it was authorised to go below the minimum sanction provided for in the Regulations, because such a more lenient attitude operates exclusively in favour of the party to be sanctioned. Taking into account that a certain understanding for the player’s stance had been shown already when establishing the amount of compensation, the members present at the meeting deemed it inappropriate to use the same mitigation causes in order to reduce the sports sanctions. Yet, bearing in mind that, in all probability, the player, Christian Maicon Henning, had decided to leaver Prudentopolis SC in order to not be forced to stop from playing football for a certain period of time, the DRC was of the opinion that it could nevertheless somewhat soften the effect of the sports sanctions by giving the player the opportunity to personally influence the length of the suspension. Based on these considerations, it was decided to suspend the player, Christian Maicon Henning, for the period of four months from participating in any official match. The suspension shall, however, be automatically lifted on the day the player pays the due compensation to Prudentopolis SC. 11. Prudentópolis argues that: Therefore, the suspension was based on the disrespect by the player’s side of the basic pinciple of maintenance of contractual stability in football, contained on the FIFA Regulations for the Status and Transfer of Players. Such principle is of paramount importance, from the perspective of clubs, players and the public, which shall govern the relation between the contracting parties and must therefore be established by regulatory system which responds to the specific needs of football and which strikes the right balance between the respective interests of players and clubs and preserves the regularity and proper functioning of sporting competition (see FIFA Circular Letter no. 769). 12. Subsidiarily, Prudentópolis submits that: However, in the worst-case scenario, if this Court of Arbitration considers admissible the application made by the Appellant, we would like to request the Panel to determine the Appellant to proceed in a deposit of the compensation established by FIFA DRC – amounting to USD 300.000,00 (three hundred thousand northamerican dollars) – in a CAS escrow account, as per this Court’s jurisprudence CAS 2004/A/689). 13. FIFA argues: […], we would firstly like to question the alleged irreparable harm, given that the DRC imposed a suspension of four months on the Appellant. However, the DRC granted the Appellant the opportunity to personally influence the length of the suspension by stating that the sanction would be automatically lifted on the day the Appellant pays the compensation due to the club, Prudentopolis SC (cf. point 5. of the decision of the DRC). Consequently, the sanctions imposed on the Appellant are certainly not as severe as the measures generally applied in similar cases. Furthermore, we must emphasise that the dismissal of the Appellant’s application to stay the execution of the decision appealed against would not affect his financial position, since in August 2004 the Appellant signed a two-year employment contract with Prudentópolis, Eintracht Frankfurt e.V., valid until 30 June 2006, and the German club is compelled to fulfil its financial obligations towards him. In addition, the Appellant is not in a situation that would imply the search for a new employer directly after a period of suspension. Moreover, from a sporting point of view, the Appellant is fully integrated in the football team of his current club, at which, apart from a short absence in summer 2004, he has been constantly training and playing since the 2003/2004 season. The Appellant will not be suffering any sporting damages either, since his athletic condition is sufficiently taken care of. Last but not least, we would like to state that if, indeed, the Appellant were to be acquitted or partly acquitted by CAS, he would be entitled to claim compensation for the loss suffered because of the restriction to participate in official football matches form the party that presented the relevant claim before the DRC. Secondly, as far as the Appellant’s likelihood of success on the merits of the dispute is concerned, we deem that even prima facie all the elements at disposal demonstrate that the Appellant unilaterally breached the employment contract he concluded with the club, Prudentopolis SC, on 9 August 2004 without just cause during the so-called protected period, i.e. the first two or three years of the contractual relation, depending on the case (cf. art. 21 par. 1 lit. (a) and (b) of the FIFA Regulations for the Status and Transfer of Players). In this respect, we fully back the motivations and considerations of the decision rendered by the DRC on 26 November 2004. It is undisputed that the Appellant concluded an employment contract with the Brazilian club, Prudentopolis SC, on 9 August 2004, for the duration of four years. Unquestionably, he had chosen to enter into the relevant agreement. Furthermore, it is essential to recall that the Appellant had even challenged the validity of his previous employment contract with Eintracht Frankfurt e.V., by contesting the legality of the unilateral extension of the first employment contract he had signed with the German club. To that regard, the Appellant had asked FIFA to authorise him to sign for the club of his choice. Consequently, we deem that there are no reasons which would allow the assumption that the employment contract concluded between the Appellant and Prudentopolis SC is null and void or ineffective. Furthermore, it is equally undisputed that, despite the existing engagement with the Brazilian club, the Appellant decided to sign a new contract with his former German club, Eintracht Frankfurt e.V. In view of the above, it must be concluded that, even prima facie, and without entering into the details of the substance, the Appellant’s behaviour clearly constitutes a breach of the employment contract he concluded with the club, Prudentopolis SC, without valid reasons. Thirdly, and as far as the so-called balance of convenience or interests is concerned, we would like to reaffirm the principle of the maintenance of contractual stability, which represents a crucial pillar of the agreement between FIFA/UEFA and the European Commission signed in March 2001. This agreement and its principles represent the core of the current version of the FIFA Regulations for the Status and Transfer of Players. In particular, we are eager to point out that the disciplinary measures provided for by the above Regulations serve as a deterrent against unjustified breach of contract and that suspending the effect of such a sanction would represent an inappropriate example towards all the football players, especially in view of the particular attention that the present case has aroused in the world of football. 14. By separate correspondence of 30 December 2004, FIFA further submits that: […] as exposed in our previous correspondence FIFA firmly rejects the application to stay the execution of the challenged decision submitted by the Appellant. Only for the unlikely event that the CAS should accept the relevant application, we would support the demand of the other Respondent, and would request that the Appellant should at least be instructed to pay the amount of USD 300’000 into a CAS escrow account. 15. According to the CAS jurisprudence, as a general rule, when deciding whether to stay the execution of the decision appealed from, it is necessary to consider whether the measure is useful to protect the Appellant (here the Player) from irreparable harm, the likelihood of success on the merits of the appeal and whether the interests of the Appellant outweigh those of the opposite party. It is necessary to compare the risks incurred by the Appellant in the event of immediate execution of the decision with the disadvantages for the Respondent in being deprived from such execution (so-called balance of convenience or interests). The Appellant must make at least a plausible case that the facts relied on by him and the rights which he seeks to enforce exist and that the material conditions for a legal action are fulfilled (CAS 2000/274, published in the Digest of CAS Awards II, p. 757; CAS 98/200, ibid., pp. 38- 41; CAS 2004/A/678). 16. The disciplinary Decision was imposed pursuant to art. 23 (a) of RSTP, which provides the following: If the breach occurs at the end of the first or the second year of contract, the sanction shall be a restriction of four months of his eligibility to participate in any official football matches from the beginning of the new season of the new club’s national championship. 17. In the case at hand, the Appellant’s chances of success are prima facie reasonable in the sense that they cannot be definitely discounted, contrary to what FIFA asserts. The Appellant submits in summary that he did not breach the contract concluded with Prudentópolis, as this contract was imperfectly agreed upon, given the existing contract with his former club Eintracht Frankfurt and given the refusal by the German Football Association to issue the international registration transfer certificate of the player. The resolution of these issues will depend upon an assessment of all the evidence, which can only sensibly be undertaken at the full hearing of the case. At this stage, it is impossible to express any further view on the merits of this dispute. 18. As to the risk that the Appellant suffers an irreparable damage, for a player to be denied the opportunity to play during four months would cause him damage irreparable if the Panel to be appointed were eventually to find that the suspension should be set aside (Preliminary decision of 19 August 2003, CAS 2003/O/482). Although FIFA suggests that if the suspension were held to be ill founded at the hearing, the Appellant might have to claim for compensation against Prudentópolis, it is doubtful under which law such compensation should be sought for and no authority was quoted to support this assertion. In any event, a – possibly controversial – cause of action is no complete remedy for the Appellant (ibid.). Nor does FIFA demonstrate, at least prima facie, its assertion that the Appellant would suffer no harm because Eintracht Frankfurt should be compelled to fulfil its financial obligations towards the Player deriving from the employment contract signed by the player and the German club. At this stage, it appears thus that the execution of the particular disciplinary sanction contained in the Decision would result in an immediate harm to the Appellant, which would be difficult to compensate. 19. Eventually, as to the balance of convenience or interests, FIFA submits that the principle of the maintenance of contractual stability is a crucial pillar of the FIFA Regulations for the Status and Transfer of Players. FIFA specifies that “the disciplinary measures provided for by the above Regulations serve as a deterrent against unjustified breach of contract and that suspending the effect of such a sanction would represent an inappropriate example towards all the football players, especially in view of the particular attention that the present case has aroused in the world of football”. In accordance with the CAS jurisprudence, this argument cannot be accepted. Indeed, FIFA assumes that the Appellant is in breach and merited the sanction, but that is the very matter that the Panel to be appointed will have to decide (CAS 2003/O/482, op. cit.). Likewise, the deterrent effect of the sanction will not be undermined if its imposition is merely postponed and not cancelled (ibid.). The risks incurred by the Appellant in the event of immediate execution of the decision seem thus to outweigh the disadvantages for FIFA in being deprived from such execution. It is however worthwhile to note here that FIFA seems to be much less sensible to the importance of the deterrent effect of the sanction imposed on the Appellant should he pay immediately the compensation of USD 300,000 to Prudentópolis, no matter the purported breach of his duties related to the maintenance of the contractual stability (Chapter VIII of the FIFA Regulations for the Status and Transfer of Players), as, in such circumstances, the suspension would be simply lifted. 20. In view of the above, the application for a stay of the disciplinary Decision is to be allowed. Application for a stay of the monetary award 21. The Appellant has also applied to stay the Decision in its financial aspects, namely the Monetary Award. 22. According to the Decision, the Appellant should pay to Prudentópolis a certain sum of money, namely USD 300,000. To execute and enforce such a decision, Prudentópolis would need the assistance of the competent official state authorities. However, in accordance with the CAS jurisprudence (see for instance CAS 2003/O/486), because of the present pending appeal, Prudentópolis is not legally in the position to enforce the Decision. Therefore, there is no need and no legal basis to stay the Decision with regard to the Monetary Award (ibid.). 23. Consequently, the Appellant’s application for a stay of the Decision with regard to the Monetary Award is to be dismissed. Payment into the CAS escrow account 24. Prudentópolis has subsidiarily requested that the Monetary Award be paid into a CAS escrow account, in order to secure the Appellant’s obligations towards the Brazilian club and that the stay of the challenged decision, should it be pronounced, be subject to such payment. The Appellant has opposed to such subsidiary request. 25. Art. R37 of the Code provides that provisional and conservatory measures can be made conditional upon the provision of security. This may only concern the stay of the disciplinary sanction. Indeed, the monetary award, being unenforceable, may not be stayed and the payment of such monetary award may not be ordered as a provisional measure. In the case at hand, the stay is only to be ordered with regard to the disciplinary sanction. Therefore, the security set forth at art. R37 para. 4 of the Code may only be required to guarantee the implementation of the suspension imposed on the player and nothing else. 26. In any event, under the CAS jurisprudence and in accordance with Swiss Federal Law, the Loi sur la poursuite pour dettes et faillites, only a judge responsible for the enforcement of claims can make freezing orders, which orders cannot be made by ordinary civil courts or arbitral tribunals (see Preliminary Decision issued in CAS 2004/A/568). It follows that, in the absence of any agreement by the parties, CAS has no jurisdiction to make such an order and that the application of Prudentópolis must be dismissed in that respect. 27. In its submission of 30 December 2004, FIFA declares that it would support Prudentópolis’ demand regarding the payment to the CAS escrow account of USD 300,000, “only for the unlikely event that the CAS should accept the relevant application” of a stay. 28. FIFA’s intention does not seem to secure the implementation of the suspension imposed on the player, but rather to back up Prudentópolis’ application that the Monetary Award be transferred to a CAS escrow account, which application is to be dismissed, as stated above. Should however FIFA actually be seeking for a security with regard to the enforcement of the sanction imposed on the Appellant, in case such sanction would be stayed, such application is also to be dismissed. First, such request, if any, would be unsubstantiated. FIFA does not demonstrate, not even at this preliminary stage, nor even submits any ground for making the stay of the disciplinary decision conditional to the provision of security. Furthermore, should the Panel to be appointed confirm the suspension of the Appellant, the implementation of such sanction would only be postponed in the time. There seems to be no risk whatsoever that the Player escapes from such penalty, as FIFA has all means to compel the Appellant, the German football association and any other national football association to abide by its disciplinary Decision. Therefore, there appears to be no reasonable ground to pronounce the stay of the decision under the condition of the provision of security by the Appellant in favour of FIFA. 29. It follows that the subsidiary request by Prudentópolis and by FIFA to make the issuance of the stay of the Decision conditional to the provision by the Appellant of a security of USD 300,000 must be dismissed. The Deputy President of the Appeals Arbitration Division of the Court of Arbitration for Sport, ruling in camera, pronounces: 1. The application by Mr Christian Maicon Henning for granting the stay of the decision issued on 26 November 2004 by the FIFA Dispute Resolution Chamber is upheld with respect to the suspension of four months imposed on Mr Christian Maicon Henning and dismissed with respect to the rest of such decision. 2. The application by Prudentópolis Esporte Clube for making the stay of the decision conditional to the provision of security by Mr Christian Maicon Henning is dismissed. 3. (…).