F.I.F.A. – Players’ Status Committee / Commissione per lo Status dei Calciatori – club vs club disputes / controversie tra società – (2016-2017) – fifa.com – atto non ufficiale – Decision 27 July 2016

Decision of the Single Judge

of the Players’ Status Committee

passed in Zurich, Switzerland, on 27 July 2016,

by

Geoff Thompson (England)

Single Judge of the Players’ Status Committee,

on the claim presented by the club

Club A, country B

as “Claimant”

against the club

Club C, country D

as “Respondent”

regarding a contractual dispute between the parties relating to the Player E

I. Facts of the case

1. On 29 January 2015, the club of country B, Club A (hereinafter: the Claimant), and the club of country D, Club C (hereinafter: the Respondent), concluded a transfer agreement for the transfer of the Player E (hereinafter: the player), from the Claimant to the Respondent. The aforesaid transfer agreement stipulated, inter alia, that:

“Second: TRANSFER FEE AND PAYMENT INSTALLMENTS

2.1. TRANSFER FEE

In consideration of the transfer of the Player’s registration, the clubs agree that [the Respondent] should pay to [the Claimant] the sum of € 500.000,00 (FIVE HUNDRED THOUSAND EUROS), (“the Transfer Fee”), in five installments, payable in all cases by [the Respondent], by bank transfer, to the following bank account of [the Claimant]:

(…)

Gross amounts Dates of payment

a) 50.000 € 01.03.2015

b) 50.000 € 01.05.2015

c) 100.000 € 01.11.2015

d) 150.000 € 01.03.2016

e) 150.000 € 01.10.2016

TOTAL FIGURES 500.000,00 €

After each expiration date, [the Respondent] will have an additional period of 15 days and after that will enter into definitive failure.

(…)

[The Claimant] shall submit to [the Respondent] in advance of payments due a valid invoice for all sums payable under this Agreement, to the email address.

2.2. ADDITIONAL AMOUNTS:

In addition to the transfer fee, mentioned in point 1, in the event that [the Respondent] sells/transfers the player to a third club, either on definitive or temporary basis, [the Claimant] will be entitled to receive the amount corresponding to 40 % (forty percent), of any and all transfer fees, in the minimum amount of 1.000.000,00€ (one million Euros), received by [the Respondent] from any third club or party.

In the event that the player is transferred on a definitive basis for free, [the Respondent] is nevertheless liable to pay to [the Claimant], the extra Fixed amount of 1.000.000,00€ (one million Euros).

2.3. PENALTY CLAUSE:

In case [the Respondent] fails to pay any of the instalments referred on 2.1 A), 2.1 B), 2.1 C), 2.1 D) and 2.1 E) above in the respective due date, all amounts due from that date on shall become immediately receivable and shall be immediately paid to [the Claimant], increased by a penalty of 100% (one hundred percent), thereby totalizing 1.000.000,00 €, which the parties hereby accept as being fair and proportional due to the urgency and relevance of the present agreement, not to mention the additional amount that may be due in connection with 2.2 above.”

2. On 3 June 2015, the Claimant lodged a claim in front of FIFA against the Respondent for breach of contract indicating that the Respondent had failed to pay the second instalment stipulated in clause 2.1 of the transfer agreement. In view of the foregoing, the Claimant requested the payment of EUR 450,000 plus “the penalty established in Clause 2.3 of the Agreement in the amount of € 500.000,00” as well as 5% interest p.a. “over the outstanding amounts until the date of their effective payment” and procedural costs.

3. In support of its claim, the Claimant explained that both parties considered the agreed penalty as being “fair and proportional” in order for the relevant payments to be made on time as well as taking into account the “urgency of the transfer”.

4. Moreover, the Claimant stressed that the first instalment was paid with a delay of 65 days by the Respondent and only after sending several reminders to the latter. In this respect, the Claimant pointed out that, at the moment of the payment of the first instalment by the Respondent, the second instalment was already outstanding for five days.

5. In its reply, the Respondent first argued that the player was transferred in September 2014 from the Respondent to the Claimant for a transfer fee of EUR 400,000, but that it never received any payment. This is why the parties, after approximately 6 months, agreed to transfer the player back from the Claimant to the Respondent, according to the latter.

6. Moreover, the Respondent stressed that both parties agreed that the Claimant has to send invoices for the respective amounts which became due with respect to the transfer compensation. However, the Respondent stressed that the invoices as well as the alleged reminders were sent to a wrong email address, even though the Claimant was aware of the correct email address as it sent the transfer agreement to the right email address.

7. Furthermore, the Respondent highlighted that it fulfilled its obligation to transfer the amount of EUR 50,000, corresponding to the first instalment, on time. However, according to the Respondent, due to the difficult situation of country D after the revolutions that took place in January 2011 and June 2013, the “Central Bank of country D” needed more time to transfer the money than expected which is why the money reached the Claimant only two months after the due date. In this respect, the Respondent pointed out that country D is facing high restrictions with respect to international bank transfers being limited to USD 100,000 per year, since the revolutions started.

8. After the signature of the transfer agreement of the player in January 2015, the Respondent stressed that the conditions got more restricted by the “Central Bank of country D” as it was only possible to transfer USD 50,000 per month. As a consequence, the Respondent stressed that this “force majeure” situation occurred after the completion of the transfer agreement and could not be foreseen by the Respondent.

9. After facing the same transfer problems with the second instalment as with the first one, the Respondent pointed out that another unforeseen event occurred as the former president of the Respondent was, after a court decision from 31 March 2015, entitled to receive money from the Respondent which he lent the club at the time he was president of the club. According to the Respondent, this event led to the situation that all transactions which were made before 18 June 2015 were suspended from the Respondent’s bank account.

10. After a successful challenge of the court decision, the Respondent argued that it could finalize the transfer of the second instalment on 21 July 2015. In this respect, the Respondent wished to highlight that, as demonstrated above, the delays of the payments were not caused by the Respondent.

11. Moreover, the Respondent stressed that, contrary to the statements of the Claimant, it was in contact with the latter and explained from the moment of the delay of the first instalment what the reasons were for the delay. Therefore, the Respondent pointed out that it was always acting in good faith.

12. Furthermore, with respect to the Claimant’s request, claiming a penalty fee of EUR 500,000 as well as 5% interest p.a., the Respondent referred to the jurisprudence of the FIFA Players’ Status Committee, stating that “a penalty for late payment cannot be requested together with default interest”.

13. In addition, the Respondent pointed out that the Claimant acted in bad faith with filing its claim in June 2015, as the parties reached several internal agreements on the payments of the respective instalments. In this regard, the Respondent argued that when the player was transferred from the Respondent to the Claimant and the latter failed to pay the transfer fee, the Respondent acted respectful and never lodged a claim in front of FIFA.

14. In continuation, the Respondent pointed out that shortly after the Claimant lodged its claim, it paid the second instalment. Therefore, the Respondent argued that the Claimant has no right to request any further payment, i.e. interest or penalty payment, which is in any case disproportionate, from the Respondent.

15. With respect to the calculation, the Respondent referred to the jurisprudence of the Court of Arbitration for Sport and stressed that the Claimant is only entitled to claim for its positive interest, i.e. its actual loss. However, the Claimant did not provide sufficient evidence in order to establish such loss, according to the Respondent.

16. Moreover, the Respondent referred to the penalty clause and stressed that the jurisprudence on the Swiss Code of Obligations establishes exceptions of the strict principle of pacta sunt servanda with respect to penalty clauses. In this regard, the Respondent highlighted that the deciding body can annul or reduce a penalty fee with respect to the following criteria:

 “the seriousness of the fault or breach”: in this respect the Respondent pointed out that the amounts due were “merely paid with a delay of one month and a half”;

 “the economic situation of the parties, particularly the debtor’s and the creditor’s interest on his counterparty’s execution of the obligation at stake”: in this respect, the Respondent stressed that the rather short delay of only one and a half month and the small amount of EUR 50,000 could not cause a huge financial impact on the Claimant considering its income from other transfers;

 “obvious lack of proportion between the harm caused and the penalty stipulated thereto and in comparison to the actual risk the creditor was exposed to”: In this respect, the Respondent argued that as the value of the player was EUR 500,000 as agreed upon by the parties within the transfer agreement, it is highly disproportionate to request a penalty in the amount of EUR 500,000.

17. In the event, that the FIFA Players’ Status Committee should come to the decision to award a penalty fee, only the established interest rate of 5% p.a. should be applied in accordance with the longstanding jurisprudence of the FIFA deciding bodies.

18. Finally, the Respondent stressed that the penalty clause should be declared null and void as it fulfilled its payment obligation only one month and a half later and always informed the Claimant about the current status of the respective payment.

19. In its final position, the Claimant first pointed out that the Respondent fully acknowledged the transfer agreement signed between the parties and thereby as well that it paid the first and second instalment.

20. Moreover, the Claimant argued that the transfer agreement concluded between the Claimant and the Respondent in August 2014 is irrelevant for the matter at hand and was cancelled by both parties.

21. With respect to the Respondent’s argument that the Claimant used a wrong email address in order to send the invoices and reminders, the Claimant highlighted that it used the email address which was agreed upon and put in the transfer agreement by both parties. In this respect, the Claimant referred to the documentation provided by the Respondent from which it can be established that the email address used is the same as in the transfer agreement. Moreover, the Claimant stressed that even though the Respondent alleged that the aforementioned documents were sent to the wrong email address, the latter still paid the first two instalments according to the invoice issued by the Claimant.

22. In addition, the Claimant stressed that, contrary to the statement of the Respondent, the latter did not try to contact or to explain the delay of its payments at any time, which is why it could not provide any evidence in order to prove its allegation.

23. Furthermore, the Claimant acknowledged the payment receipt of the second instalment on 27 July 2015, which was due on 1 May 2015. In this respect, the Claimant amended its claim, requesting EUR 400,000 corresponding to the final three instalments, which, according to clause 2.3 of the transfer agreement, became due immediately after the payment of the first two instalments was delayed by the Respondent. In addition, the Claimant repeated its requests as described in point I.2. above.

24. Moreover, the Claimant referred to the argument of the Respondent with respect to the bank transfer difficulties in country D and argued that many companies that deal on an international level are able to make transfers through different ways. Further to this, the Claimant stressed that the Respondent signed several players on an international level, some of them probably in exchange of a transfer fee paid in Euro.

25. In addition, the Claimant highlighted that the Respondent did already transfer the amount of EUR 100,000 to the Claimant, which amounts to approximately USD 110,000, which, according to the Respondent would be in breach of a country D law and moreover would have prevented the Respondent for the entire year of 2015 to make any further international payments.

26. As to the argument of the Respondent, that all transactions were suspended due to a debt of its former president, the Claimant argued that this fact is irrelevant for the case at hand.

27. Furthermore, the Claimant pointed out that the fact that it did not file a claim after the Respondent was in default with the first instalment shows its “good faith”, as well as that it does not want to enrich itself with a “double compensation”. On the contrary, the Claimant tried to solve the matter in an amicable way and sent a letter, on 11 May 2015, informing the Respondent about the contractual breach and the penalty clause.

28. Moreover, the Claimant stressed that the penalty clause, which was contractually established, and the default interest are two separate requests, which should not be linked to each other, whereby the interest should only be applicable to the outstanding transfer fee.

29. With respect to the validity of the penalty clause, the Claimant argued that it is in line with art. 160 par. 2 of the Swiss Code of Obligations which stipulates that “Where the penalty is promised for failure to comply with the stipulated time or place of performance, the creditor may claim the penalty in addition to performance provided he has not expressly waived such right or accepted performance without reservation”. Moreover, the Claimant stressed that the Swiss Code of Obligations stipulates that a penalty is payable regardless if the creditor has suffered any damages and that the parties are free to contractually determine the amount of the penalty.

30. Finally, the Claimant argued that there is no reason to establish that the penalty clause is disproportionate referring to, inter alia, the following arguments:

 the clause was “freely and consciously” agreed upon by the parties;

 the amount was enhanced as “fair and proportional in view of the urgency of the transfer”;

 the proportionality of the penalty clause with respect to possible future payments in the minimum amount of EUR 1,000,000 according to clause 2.2. of the transfer agreement;

 the compliance of the Claimant’s contractual obligations towards the Respondent.

31. In its final position, the Respondent reiterated its position with respect to the importance of the first transfer agreement signed in August 2014 in order to establish the good faith of the Respondent.

32. Moreover, the Respondent stressed that a mistake must have occurred in the transfer agreement with respect to the email address of the Respondent being stipulated. In this respect, the Respondent pointed out that the agreement was drafted by the Claimant “in the final minutes of the relevant window transfer period”, which is why it could not be corrected anymore by the Respondent. In continuation, the Respondent argued that it was always corresponding with the Claimant via the correct email address, up until the signature of the transfer agreement, which is why the argument of the Claimant that it was operating with a “fully operative” email address should be disregarded.

33. As a consequence of the above mentioned, the Respondent could not respond to any invoice issued or any reminders sent by the Claimant.

34. Finally, with respect to all other arguments raised by the Claimant, the Respondent reiterated its position.

II. Considerations of the Single Judge of the Players’ Status Committee

1. First of all, the Single Judge of the Players’ Status Committee (hereinafter: the Single Judge) analysed which Procedural Rules were applicable to the matter at hand. In this respect, he referred to art. 21 of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (edition 2015; hereinafter: the Procedural Rules) as well as to the fact that the present matter was submitted to FIFA on 3 June 2015. Therefore, the Single Judge concluded that the 2015 edition of the Procedural Rules is applicable to the matter at hand.

2. Subsequently, the Single Judge analysed which edition of the Regulations on the Status and Transfer of Players is 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 2015 and 2016 editions of the Regulations on the Status and Transfer of Players and, on the other hand, to the fact that the claim was lodged in front of FIFA on 3 June 2015. In view of the foregoing, the Single Judge concluded that the 2015 edition of the Regulations on the Status and Transfer of Players (hereinafter: the Regulations) is applicable to the case at hand as to the substance.

3. Furthermore, the Single Judge confirmed that, on the basis of art. 3 par. 1 and par. 2 of the Procedural Rules in connection with art. 23 par. 1 and par. 3 as well as art. 22 lit. f) of the Regulations, he was competent to deal with the present matter since it concerned a dispute between two clubs affiliated to two different associations.

4. His competence and the applicable regulations having been established, the Single Judge entered into the substance of the matter. In doing so, the Single Judge started by acknowledging the above-mentioned facts of the case as well as the documents contained in the file. However, the Single Judge emphasized 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.

5. In this respect, and first of all, the Single Judge noted that the parties had concluded an agreement for the definitive transfer of the player from the Claimant to the Respondent, according to which the latter would pay to the former the amount of EUR 500,000 in five instalments, in exchange for the acquisition of the services of the player.

6. Furthermore, the Single Judge also noted that the parties had agreed in clause 2.3. of the agreement that in case the Respondent would fail to make the payment of any instalment of the transfer compensation by its relevant due date, the entire transfer compensation would become payable to the Claimant in full immediately. Further to this, the agreement stipulated that the Respondent would have to pay a penalty fee for the late payment in the amount of EUR 500,000.

7. The Single Judge then reverted to the allegations of the Claimant and noted that it claimed that the Respondent had failed to pay the outstanding transfer compensation under clause 2.1. of the agreement. In particular, the Claimant initially argued that the Respondent failed to pay the second instalment in the amount of EUR 50,000 as contractually agreed and therefore, according to clause 2.3. the whole amount became due. Consequently, and due to the fact that in the meantime the Respondent paid the second instalment in the amount of EUR 50,000 to the Claimant, the latter, on the basis of clauses 2.1. and 2.3. of the agreement, argued that it was entitled to the amount of EUR 400,000, together with an interest rate of 5% p.a. on the outstanding amounts. In addition, the Claimant requested the penalty fee stipulated in clause 2.3. in the amount of EUR 500,000 in view of the fact that the first as well as the second instalment were paid by the Respondent after the due dates.

8. Reverting to the arguments raised by the Respondent, the Single Judge observed that the latter had argued in essence that the Claimant sent the invoices to the wrong email address instead of the correct one, In this respect, the Respondent stressed that it was clearly an act of bad faith on the side of the Claimant using the wrong email address, which was erroneously put in the transfer agreement, as the parties were corresponding before through the correct email address. Therefore, the Respondent was not in a position to respond to any invoice sent by the Claimant.

9. Furthermore, the Single Judge took note of the Respondent’s argument, stating that due to the bank situation in country D after the revolutions in January 2011 and June 2013, it took the banks longer to transfer money, which is why the Respondent was not in the position to transfer the instalments on time.

10. Lastly, the Single Judge recalled that the Respondent stressed that the penalty fee in the amount of EUR 500,000 is completely disproportionate with respect to the transfer fee and moreover not justified as the late payments were not caused by the behaviour of the Respondent but rather by “force majeure”.

11. In view of the above, and starting with the amount claimed by the Claimant under clauses 2.1. and 2.3. of the agreement, the Single Judge pointed out that it remains uncontested that both the first and the second instalment of the transfer compensation, agreed upon between the parties, were not paid on time by the Respondent. Consequently, the Single Judge referred to the clear wording of the first sentence of clause 2.3. and concluded that the whole amount of the transfer compensation became due immediately. As the Respondent paid already the amount of EUR 100,000, EUR 400,000 was still outstanding and should therefore be paid by the Respondent to the Claimant in compliance with clause 2.3. of the contract.

12. Further to this, the Single Judge held that the rights of the Claimant could not be affected by the bank situation in the Respondent’s country. Moreover, taking into account that the revolutions happened in 2011 and 2013 as stated by the Respondent, the latter should have been aware of the apparent extra time needed for the transfer of the money.

13. In continuation, and with respect to the apparent wrong email address used by the Claimant, the Single Judge observed that the Claimant used the exact address, which was agreed upon by both parties in the transfer agreement. In this respect, the Single Judge underlined that the Respondent had not provided any evidence that it had informed the Claimant that the email address provided in the transfer agreement was wrong. Therefore, the Single Judge concluded that it could not be held against the Claimant that it sent the invoices to the wrong email address.

14. Having established the above, the Single Judge determined 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 Respondent has to pay the Claimant the outstanding transfer compensation in the amount of EUR 400,000.

15. Furthermore, the Single Judge addressed the remaining requests of the Claimant, namely, its requests that the Respondent is condemned to pay a penalty fee according to clause 2.3. of the transfer agreement in the amount of EUR 500,000 due to the late payment of the second instalment.

16. Having duly examined clause 2.3. of the agreement, the Single Judge considered that, taking into account the initial transfer fee, a penalty fee in the amount of EUR 500,000 is excessive as it equals 100% of the transfer fee. Nevertheless, based on the discretion of the Single Judge when dealing with excessive penalty fees, and with reference to the principle of ex aequo et bono, the Single Judge decided to reduce the penalty fee and found that an amount of EUR 250,000 (i.e. 50% of the transfer fee) can be considered as proportionate and fair, considering the fact that the Respondent did not make any further payment for more than a year since the claim was lodged.

17. Lastly, the Single Judge referred to the claim of the Claimant, whereby the latter requested 5% interest p.a. “over the outstanding amounts until the date of their effective payment”. In this regard, the Single Judge wished to refer to the well-established jurisprudence of the Players’ Status Committee and stressed that as the Claimant is already indemnified for the late payment through the contractually agreed penalty fee, it cannot additionally request an annual interest for the late payment. Consequently, the Single Judge decided to reject the Claimant’s request for interest of 5% p.a. on the outstanding amounts.

18. On account of all the above, the Single Judge determined that the Respondent has to pay to the Claimant the total amount of EUR 400,000 as well as a penalty fee in the amount of EUR 250,000.

19. Lastly, the Single 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 proceedings before the Players’ Status Committee including its Single Judge, costs in the maximum amount of CHF 25’000 are levied. The relevant provision further states that the costs are to be borne in consideration of the parties’ degree of success in the proceedings (cf. art. 18 par. 1 of the Procedural Rules).

20. In respect of the above, the Single Judge held that the amount to be taken into consideration in the present proceedings is EUR 400,000, related to the claim of the Claimant. Consequently, the DRC concluded that the maximum amount of costs of the proceedings corresponds to CHF 25,000 (cf. table in Annex A).

21. As a result, taking into account the particularities of the present matter as well as the degree of success of the Claimant, the Single judge determined the costs of the current proceedings to the amount of CHF 15,000 of which CHF 10,000 shall be borne by the Respondent and CHF 5,000 by the Claimant.

*****

Decision of the Single Judge of the Players’ Status Committee

1. The claim of the Claimant, Club A, is partially accepted.

2. The Respondent, Club C, has to pay to the Claimant within 30 days as from the date of notification of the present decision, the total amount of EUR 400,000.

3. The Respondent has to pay to the Claimant within 30 days as from the date of notification of the present decision, the total amount of EUR 250,000 as penalty fee.

4. In the event that the aforementioned sums 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.

5. Any further claim lodged by the Claimant is rejected.

6. The final costs of the proceedings in the amount of CHF 15,000 are to be paid, within 30 days of notification of the present decision, as follows:

6.1. The amount of CHF 10,000 has to be paid by the Respondent to FIFA to

the following bank account with reference to case nr.:

UBS Zurich

Account number 366.677.01U (FIFA Players’ Status)

Clearing number 230

IBAN: CH27 0023 0230 3666 7701U

SWIFT: UBSWCHZH80A

6.2. The amount of CHF 5,000 has to be paid by the Claimant to FIFA. Given

that the Claimant has already paid the amount of CHF 5,000 as advance of costs at the start of the present proceedings, no additional amount has to be paid by the Claimant.

7. The Claimant is directed to inform the Respondent immediately and directly of the account number to which the remittances under points 2. and 3. above are to be made and to notify the Players’ Status Committee of every payment received.

*****

Note relating to the motivated decision (legal remedy):

According to article 58 par. 1 of the FIFA Statutes, this decision may be appealed against before the Court of Arbitration for Sport (CAS). The statement of appeal must be sent to the CAS directly within 21 days of receipt of notification of this decision and shall contain all the elements in accordance with point 2 of the directives issued by the CAS, a copy of which we enclose hereto. Within another 10 days following the expiry of the time limit for filing the statement of appeal, the appellant shall file a brief stating the facts and legal arguments giving rise to the appeal with the CAS (cf. point 4 of the directives).

The full address and contact numbers of the CAS are the following:

Court of Arbitration for Sport

Avenue de Beaumont 2

1012 Lausanne - Switzerland

Tel: +41 21 613 50 00

Fax: +41 21 613 50 01

e-mail: info@tas-cas.org

For the Single Judge of the

Players’ Status Committee:

Marco Villiger

Deputy Secretary General

Player E

(Club of country B, Club A / Club of country D, Club C)

13

Encl. CAS Directives