F.I.F.A. – Players’ Status Committee / Commissione per lo Status dei Calciatori – coach disputes / controversie allenatori (2020-2021) – fifa.com – atto non ufficiale – Decision 8 September 2020

Decision of the

Single Judge of the Players' Status Committee

Passed on 8 September 2020,

regarding an employment-related dispute concerning the coach Pedro Rostoll Rodriguez

BY:

Roy Vermeer (Netherlands), Single Judge of the PSC

CLAIMANT:

Pedro Rostoll Rodriguez, Spain

represented by Mr. Daniel Muñoz

RESPONDENT:

Beijing Renhe Football Club, China

I. FACTS OF THE CASE

1. On 8 July 2019, the Claimant and the Respondent (hereinafter: “the parties”) concluded an employment contract (hereinafter: “the contract”) valid from 8 July 2019 until 30 November 2020.

2. Article 11 of the contract stated: “Definition of net amounts: All amounts specified in the present contract as remuneration of Party B, including but not limited to salary, signing on fee, advance payments and bonuses are net and free of any Chinese tax or withholding and/or any other cost or expense of any kind. Party B will receive all the amounts net and free of any current or future tax withholding, cost or any kind of income or personal tax and/or social security deductions or cost. In addition, Party A undertakes to pay Party B the amounts necessary for Party B to be able to pay all taxes deriving from the signed Employment Contract (in particular, the income tax that each year the Player shall pay) in such a way that the amount agreed is net of any tax or deduction. Furthermore, Party A will provide Party B with a Tax Residency Certificate issued by the Chinese Tax Authorities in order to be able to certify that he is tax resident in China during the year 2018. In this sense, Party A agrees and shall be obliged to withhold in accordance with the Tax Law of People's Republic of China an amount equal to a 45% of the gross amount of all amounts to be paid to Party B to the extent necessary to guarantee that, after paying the taxes or after any withholding, Party B always receives and retains a net sum equal to the agreed net amount. This increase or "grossing up" of the amounts will be mandatorily done and paid by Party A”.

3. On 29 July 2019, the parties signed an Annex to the contract.

4. On 12 November 2019, the parties concluded a settlement agreement (hereinafter: “the agreement”) by means of which they agreed to mutually terminate the contract with immediate effect.

5. Clause 3.1 and 3.2 of the agreement the Respondent should pay the Claimant EUR 56,925 net of any taxes by on or before 31 December 2019 as settlement amount. “The whole SETTLEMENT AMOUNT shall be paid net of any income tax in accordance with the definition of net amounts provided in article 11 of the EMPLOYMENT CONTRACT, which shall form integral part of the present SETTLEMENT AGREEMENT and remain valid and in force and fully applicable for the purpose of the payment of the SETTLEMENT AMOUNT. The CLUB shall also bear the payment of any bank commissions, if applicable”.

6. Clause 3.3 of the agreement provided: “3.3 The Parties expressly and irrevocably agree that in the event that for whatever reason the CLUB competes in the Chinese Super League in the 2020 football season and at the moment the CLUB's participation in the Chinese Super League for the 2020 season is confirmed by the CF A and/or the CSL ( or any other official body) the COACH is not working for a third Club, the CLUB shall be obliged to offer to the COACH the position of Assistant Coach of Mr Luis Garcia Plaza for said season with the same terms and conditions of the EMPLOYMENT CONTRACT. In the event that the CLUB does not offer to the COACH in writing the possibility to be hired as Assistant Coach of Mr Luis Garcia Plaza as agreed above, the SETTLEMENT AMOUNT shall be increased in the amount of EUR 170,000 net of any taxes. Therefore, the total full SETTLEMENT AMOUNT shall be EUR 226,925 net of any taxes (hereinafter, "INCREASED SETTLEMENT AMOUNT"), payable as follows: (i) EUR 56,925 net of any taxes, on or before 31 December 2019 (as agreed in Clause 3.2 above); (ii) EUR 170,000 net of any taxes, on or before 30 January 2020 For the avoidance of any doubt, in the event that at the moment the CLUB's participation in the Chinese Super League for the 2020 season is confirmed by the CFA and/or the CSL (or any other official body) the COACH is working for a third Club, the CLUB will not have the obligation to offer to the COACH the position of Assistant Coach of Luis Garcia for the season 2020.”.

7. Clause 4 of the agreement provided: “In the event the CLUB does not comply in full with the payment of the SETTLEMENT AMOUNT as agreed in clause 3.2 and/or with the full payment of any of the instalments of the INCREASED SETTLEMENT AMOUNT as agreed in clause 3.3 above, the COACH will serve notice to the CLUB granting 10 days to comply with said full payment, failing which, the parties expressly and irrevocably agree that it shall immediately deemed as a breach of contract without just cause by the CLUB, expressly agreeing the CLUB to pay as penalty for each contractual breach the amount of EUR 50,000 (fifty thousand euros). The parties expressly agree that this penalty shall be in any case considered to be due from the moment the 10-days default notice expires without payment and shall be paid in addition to the payment of the FULL SETTLEMENT AMOUNT and/or INCREASED SETTLEMENT AMOUNT, being such penalty of a cumulative nature (Art. 160.2 Swiss CO), without prejudice of the default interest at a rate of 10% p.a that the parties expressly agree shall be in any case applied in the event of late payment by the CLUB of the full SETTLEMENT AMOUNT plus the agreed PENALTY.”.

8. Clause 5.2 of the agreement stated: “In accordance with Article 11 of the EMPLOYMENT CONTRACT, which remains valid and in force, being integral part of this SETTLEMENT AGREEMENT, the CLUB herein expressly agrees and acknowledge that it is obliged to withhold in accordance with the Tax Law of People´s Republic of China an amount equal to a 45% of the gross amount of all amounts to be paid to the COACH to the extent necessary to guarantee that, after paying the taxes or after any withholding, the COACH always receives and retains a net sum equal to the agreed net SETTLEMENT AMOUNT and/or INCREASED SETTLEMENT AMOUNT. This increase or “grossing up” of the amounts will be mandatorily done and paid by the CLUB. For the avoidance of any doubt, the income tax to be paid and/or withhold by the CLUB will be calculated as follows:

Agreed net amount /0.55= Agreed gross amount

Agreed gross amount – agreed net amount= payable income tax

Applying this formula to the SETTLEMENT AMOUNT the result will be the following:

EUR 56,925/0.55= EUR 103,500

EUR 103,500 – EUR 56,925 = EUR 46,575 (payable income tax)»

9. Clause 5.3 of the agreement provided: “THE CLUB agrees to enter the aforementioned withholdings or deductions before the corresponding tax authority and to duly accredit to the COACH their payment on or before 30 May 2020, by delivering to the COACH by email (and the original by courier if so required) the appropriate. Tax certificate issued by the Chinese Tax Authorities in order to proof the payment and certificate the retentions and withholdings, so that the COACH has the documentary support necessary to accredit to the corresponding tax authorities (in the People´s Republic of China and/or Spain) in case an investigation or inspection is carried out by the corresponding tax authorities on said payments. Not providing said tax certificate to the COACH within the agreed date shall be deemed as a breach of the present SETTLEMENT AGREEMENT without just cause by the CLUB, being the CLUB liable to pay to the COACH an amount equal to the corresponding payable income tax applicable applying the agreed formula, plus a penalty of non-compliance equal to 25% of the amount of payable income tax”.

10. On 18 February 2020, the Claimant sent a default notice to the Respondent requesting the remaining part of the settlement amount of EUR 44,425 net of any taxes; within 10 days. The Claimant warned the Respondent in case of non-payment it would be deemed as a breach of contract and therefore the Respondent would be obliged to pay a penalty amounting to EUR 50,000 (cf. clause 4 of the agreement). In such an event, the total outstanding amount would be EUR 94,425 plus an annual interest at a rate of 10% applicable from 31 December 2019 until the date of effective payment, to no avail.

11. On 10 March 2020, the Claimant sent another default notice to the Respondent requesting the payment of EUR 94,425 plus an annual interest of 10% until the date of effective payment (cf. clause 4 of the agreement).granting 10 days to remedy the default, to no avail.

12. On 2 June 2020, the Claimant sent another default notice to the Respondent reiterating the terms of the letter sent on 10 March 2020 and in addition the Claimant reminded the Respondent of its obligation under clause 5.3 of the agreement Iproviding tax certificate) due on 30 May 2020. The Claimant granted the Respondent 10 days more (i.e. 12 June) to remedy its default, to no avail. In case, the Respondent would not fulfil its obligations within the granted deadline it would be deemed as a breach of contract and therefore the Respondent would be obliged to pay the Claimant the total amount of EUR 94,425 net of taxes along with the payable income tax, i.e. EUR 77,256.81, a penalty amount of non-compliance amounting to EUR 19,314.20 (25% of EUR 77,256.81) under clause 5.3 of the agreement net of taxes plus a default interest at a rate of 10% p.a. in accordance with clause 4 of the agreement.

13. The Claimant lodged the present claim before FIFA against the Respondent requesting:

1. To declare that the Respondent has breached the agreement with the Claimant without just cause;

2. EUR 44,425 net of taxes as remaining settlement amount under Clause 3.1 and 3.2 of the agreement.

3. EUR 50,000 net of taxes as penalty amount under Clause 4 of the agreement.

4. EUR 36,347.72 net of taxes as the amount equal to the income tax that the Respondent should have paid in China on behalf of the Claimant under Clause 5 of the agreement.

5. EUR 9,086.93 net of taxes as penalty under Clause 5.3 of the agreement.

6. EUR 25,000 net of taxes as compensation in relation to specificity of sport.

7. Default interests over all the aforementioned amounts at a rate of 10% from 31 December 2019.

8. Legal costs and expenses arising from this procedure.

On the alternative:

9. In the unlikely event the request in point no. 14.4 above is not granted, “we request this Honourable Committee to order the Respondent to (i) Gross up the Settlement Amount in due consideration of the income tax and any other financial obligation in accordance with the formula agreed by the Parties under the Employment and Settlement Agreement (ii) to withhold the corresponding amount to those financial obligations in order to guarantee that the Claimant receives the Settlement Amount net of any income tax, (iii) to duly pay the said obligations to the relevant Chinese Authorities (iv) to provide the Claimant with the corresponding with the relevant tax certificate as a proof of payment”.

14. Moreover, the Claimant underlined that since the Respondent did not reply to any of the default notices sent to the latter and did not perform any further payment, it should be entitled to an additional compensation in relation to specificity of sport.

15. The Respondent replied: “Now the Novel Coronavirus pandemic is still raging around the whole world. Our club was shut down till the middle of July. The second divisions of Chinese professional football league in which we play in 2020 season is suspended. As a professional football club, we lost our most important source of income, share of the broadcast rights. Even we have not received the full amount of the broadcast and commercial rights share of 2019 China Super League. Currently our financial status is very fragile. We promise that once we receive all overdue payments of 2019 China Super League season, we will pay the coach, Eduardo Dominguez Lago, the overdue salary and bonus of 2019 immediately”.

II. CONSIDERATIONS OF THE PLAYERS’ STATUS COMMITTEE

1. First of all, the Single Judge of the Players’ Status Committee (hereinafter also referred to as Single Judge) analysed whether he was competent to deal with the matter at hand. In this respect, he took note that the present matter was submitted to FIFA on 22 June 2020. Consequently, the Single Judge concluded that the 2020 edition of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution (hereinafter: Procedural Rules) is applicable to the matter at hand (cf. art. 21 of the Procedural Rules).

2. Subsequently, the Single Judge referred to art. 3 par. 1 and 2 of the Procedural Rules and confirmed that in accordance with art. 23 par. 1 and 4 in combination with art. 22 lit. c) of the 2020 edition of the Regulations on the Status and Transfer of Players, he is competent to deal with the matter at stake which concerns an employment-related dispute of an international dimension between a Spanish coach and a Chinese club.

3. Furthermore, the Single Judge analysed which edition of the Regulations on the Status and Transfer of Players should be applicable as to the substance of the matter. In this respect, he referred, on the one hand, to art. 26 par. 1 and 2 of the August 2020 edition of the Regulations on the Status and Transfer of Players, and on the other hand, to the fact that the present claim was lodged with FIFA on 22 June 2020. In view of the foregoing, the Single Judge concluded that the June 2020 edition of the Regulations on the Status and Transfer of Players (hereinafter: Regulations) is applicable to the case at hand as to the substance.

4. The competence of the Single Judge and the applicable regulations having been established, and entering into the substance of the matter, the Single Judge started by acknowledging the above-mentioned facts as well as the documentation contained in the file. However, the Single Judge emphasised that, in the following considerations, he will refer only to the facts, arguments and documentary evidence, which he considered pertinent for the assessment of the matter at hand.

5. In continuation, the Single Judge acknowledged that, on 8 July 2019, the Claimant and the Respondent concluded the contract valid as from 8 July 2019 until 30 November 2020.

6. Subsequently, the Single Judge took note that on 12 November 2019, the Claimant and the Respondent concluded the agreement by means of which the parties agreed upon, inter alia, the payment of EUR 56,925 as settlement amount; a penalty of EUR 50,000 in case of default; an income tax amounting to EUR 46,575 and a penalty equal to 25% of the income tax in case of lack of its payment by the Respondent to the Claimant.

7. The Single Judge observed that the Claimant sent three default notices to the Respondent and that the latter did not react to them.

8. Moreover, the Single Judge pointed out that the Respondent in its position confirmed owing to the Claimant “the overdue salary and bonuses 2019” without providing any further specification.

9. In other words, the Single Judge stated that it remained undisputed that the Respondent did not pay to the Claimant the amounts requested by the latter.

10. In continuation, the Single Judge stated that the Respondent´s arguments related to the financial difficulties due to the COVID-19 pandemic cannot be taken into account since the parties concluded the agreement on 12 November 2019 and the settlement amount was due on 31 December 2019. In this context, the Single Judge highlighted that the COVID-19 infections in China just started during the month of December 2019.

11. In view of the aforementioned, the Single Judge came to the conclusion that the reasons put forward by the Respondent in its reply to the claim does not justify the delay in paying the settlement amount and taxes as agreed in the agreement.

12. In continuation, the Single Judge focussed his attention to the Claimant’s request for EUR 44,425 as remaining settlement amount in accordance with clauses 3.1 and 3.2 of the agreement.

13. Having said this, the Single Judge acknowledged that, in accordance with the agreement, the Respondent was obliged to pay to the Claimant the amount of EUR 56,925 by 31 December 2019.

14. Therefore, as a first conclusion, the Single Judge underlined that in accordance with the basic legal principle of pacta sunt servanda, which in essence means that agreements must be respected by the parties in good faith, the Claimant is entitled to receive from the Respondent the requested amount of EUR 44,425, relating to the settlement amount pursuant to the agreement.

15. The Single Judge further observed that the Claimant asked to be awarded 10% interest p.a. (cf. clause 4 of the agreement) over the outstanding settlement amount as of 1 January 2020 until the date of effective payment.

16. Taking into account the Claimant’s request and the terms agreed by the parties, the Single Judge decided that the Respondent must pay to the Claimant interest of 10% p.a. on the amount of EUR 44,425 as from 1 January 2020 until the date of effective payment.

17. In continuation, the Single Judge acknowledged that the Claimant requested a penalty amounting to EUR 50,000, as well as, an annual interest of 10% over said penalty.

18. In this regard, the Single Judge underlined that said penalty was contractually agreed by the parties, i.e. clause 4 of the agreement.

19. In addition, the Single Judge remarked that a penalty amounting to EUR 50,000 seems to be a reasonable amount taking into account that the parties already signed the agreement and the Respondent failed to pay the outstanding settlement amount in full plus interest, on time.

20. The Single Judge recalled, once again, the legal principle of pacta sunt servanda according to which the Respondent must honored the obligations voluntarily assumed in the agreement towards the Claimant.

21. At this stage, the Single Judge was keen to emphasize that according to the long standing and well-established jurisprudence of the Players´ Status Committee in similar cases, a compensation or penalty for late payment cannot be requested together with default interest as both requests are punitive in nature and aim at compensating the creditor for late payment.

22. In light of the above, the Single Judge decided to grant the penalty of EUR 50,000 in accordance with clause 4 of the agreement in favour of the Claimant without interest.

23. In continuation, the Single Judge observed that the Claimant requested an amount of EUR 36,347.72 as the amount equal to the income tax that the Respondent should have paid in China on behalf of the Claimant (cf. clause 5.2 of the agreement).

24. In this respect, the Single Judge underlined that in accordance with the clause 5.2 of the agreement, the Respondent was obliged to withhold and pay an amount of EUR 46,575 equal to 45% as taxes.

25. In this context, the Single Judge reiterated that the Respondent did not contest the Claimant´s requests and did not provide evidence of having fulfilled its obligations in accordance with clause 5.2 of the agreement.

26. Taking into account the Claimant’s request and the terms agreed by the parties, the Single Judge decided that the Respondent must pay to the Claimant the requested amount of EUR 36,347.72 as income tax.

27. Furthermore, the Single Judge took note of the Claimant’s request for a penalty amounting to EUR 9,086.93 due to the alleged lack of payment of the relevant tax to the corresponding Chinese tax authority and lack of subsequent notification to the Claimant “on or before 30 May 2020” (cf. clause 5.3 of the agreement).

28. In this respect, the Single Judge underlined that a penalty amounting to 25% of the outstanding tax amount seems to be reasonable.

29. Therefore, the Single Judge concluded that the Claimant is entitled to receive from the Respondent the penalty amounting to EUR 9,086.93 since is proportional and contractually agreed by the parties.

30. In continuation, the Single Judge took note that the Claimant requested a compensation based on the specificity of sport.

31. In this regard, the Single Judge rejected the Claimant’s claim due to lack of legal basis.

32. Finally, the Single Judge took note of the Claimant’s request for legal costs and expenses. In this respect, the Single Judge referred to the art. 18 par. 4 of the Procedural rules which states that no procedural compensation shall be awarded in proceedings of the Players’ Status Committee.

33. Consequently, the Single Judge rejected the Claimant´s request for legal costs and expenses.

34. Taking into account all the previous considerations, the Single Judge summarized that the Claimant´s claim is partially accepted and that the Respondent has to pay to the Claimant the following amounts: - EUR 44,425 plus an annual interest at a rate of 10% from 1 January 2020 until the date of effective payment; -EUR 50,000; - EUR 36,347.72 and - EUR 9,086.93.

35. The Single Judge concluded his deliberations in the present matter by establishing that any further claim of the Claimant is rejected.

36. In continuation, the Judge referred to art. 25 par. 2 of the Regulations in combination with art. 18 par. 1 of the Procedural Rules, according to which in the proceedings before the Players´ Status Committee costs in the maximum amount of CHF 25,000 are levied. The costs are to be borne in consideration of the parties’ degree of success in the proceedings.

37. However, in this respect, the Judge referred to art. 18 par. 1 i. of the Procedural Rules according to which “For any claim or counter-claim lodged between 10 June 2020 and 31 December 2020 (both inclusive), no procedural costs shall be levied”.

38. Thus, considering that the present claim was lodged in the relevant period, no procedural costs can be awarded in this matter.

III. DECISION OF THE PLAYERS' STATUS COMMITTEE

1. The claim of the Claimant, Pedro Rostoll Rodriguez, is partially accepted.

2. The Respondent, Beijing Renhe Football Club, has to pay to the Claimant, within 30 days as from the date of notification of this decision, the following amounts:

1) EUR 44,425 as outstanding remuneration plus 10% interest p.a. as from 1 January 2020 until the date of effective payment;

2) EUR 50,000 as penalty;

3) EUR 36,347.72 as outstanding amount and

4) EUR 9,086.93 as penalty.

3. Any further claims of the Claimant are rejected.

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

5. In the event that the amounts due to the Claimant in accordance with the above-mentioned point 2. are not paid by the Respondent within the stated time limit, the present matter shall be submitted, upon request, to the FIFA Disciplinary Committee for consideration and a formal decision.

For the Players' Status Committee:

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 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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