F.I.F.A. – Players’ Status Committee / Commissione per lo Status dei Calciatori – club vs club disputes / controversie tra società – (2020-2021) – fifa.com – atto non ufficiale – Decision 8 December 2020

Decision of the

Single Judge of the Players' Status Committee

Passed on 8 December 2020,

regarding a contractual dispute concerning the transfer of the player Rodrigo Eduardo Costa Marinho

BY:

José Luis Andrade (Portugal), Member

CLAIMANT:

Pyramids FC, Egypt

Represented by Mr. Rolf Muller

RESPONDENT:

Cruzeiro Esporte Club, Brasil

Represented by Tannuri Ribeiro Advogados

I. FACTS OF THE CASE

1. On 16 January 2019, the Egyptian club, Pyramids FC (hereinafter: Pyramids or the Claimant), and the Brazilian club, Cruzeiro EC (hereinafter: Cruzeiro or the Respondent), concluded an agreement on the permanent transfer of the Brazilian player, Mr Rodrigo Eduardo Costa Marinho ¨Rodriguinho¨, from the Claimant to the Respondent against payment of the transfer fee of USD 7,000,000 (hereinafter: the Transfer Agreement).

2. Clause 2.1 of the Transfer Agreement, detailed a payment plan for the transfer fee agreed of USD 7,000,000 as follows.

3. Furthermore, Clause 2.8 of the Transfer Agreement, defined a fine “in the event the [Respondent] fails to provide the payment of fee amount agreed above within the agreed a default interests shall be subject to the payment of the amount due plus a fine of 10% (ten per cent) on the full amount outstanding at the rate of 6% per year rate from the due date until the date of payment”.

4. At the date of the present decision, the Respondent has only paid the first instalment agreed.

5. On 12 December 2019, the Claimant put the Respondent in default of USD 500,000, due in November 2019, giving a 7-day deadline to remedy said non-payment, but said correspondence remained unanswered. To date, the rest of the instalments agreed have been not paid.

6. For the sake of completeness, on 13 and 17 February 2020, the Claimant tried to put the Respondent in default but as admitted by the Claimant “neither the registered letter (of 13 February 2020) not the email (of 17 February 2020) could be delivered” (paragraph 10 of the claim).

II. PROCEEDINGS BEFORE FIFA

7. On 24 April 2020, Pyramids filed a claim against Cruzeiro before FIFA. A brief summary of the parties’ positions is detailed in continuation.

a. Claim of the Claimant

8. In his claim, the Claimant held that in accordance with clause 2.1. of the Transfer Agreement, there was agreed a clear payment plan for the transfer fee (EUR 7,000,000) of the player Rodriguinho.

9. Equally, the Claimant stated that “the parties have agreed in clause 2.8. of the contract, that the Respondent has to pay a fine of 10% on the full outstanding amount and an interest of 6% per year form the due date until the date of the payment in addition to the due instalment and the default interest, if he fails to pay the instalments at their fixed dates”.

10. The Claimant further stated that the Respondent only paid the first instalment in the amount of USD 1,000,000; however, Cruzeiro has failed to make the rest of the payments due on the Transfer Agreement.

11. The Claimant suggested that the delay in payment may result from the relegation of Cruzeiro in second division (“for the first time after 98 years of the club history”). Furthermore, the Claimant alleged that was informed about the signing of the player for the Brazilian club, Esporte Clube Bahia, after the referred relegation of the Respondent.

12. Furthermore, the Claimant held that the Respondent never replied to any of its correspondence.

13. In light of the above, the Claimant pointed out that in order “to avoid further procedure before the FIFA Player’s Status Committee” if the Respondent “fails to pay the future instalments at their fixed dates”, the Claimant requested the payment of USD 3,000,000 - i.e. from the second (November 2019) to the sixth instalments (November 2020) due as transfer fee (cf. point 2 above) - plus a default interest at rate of 5% per annum; as well as, the imposition of a 10% fine over each instalment plus the application of default interest at rate of 6% per annum.

14. Lastly, the Claimant stressed that “by the 10th of January 2022 the Respondent is obligated to pay the last installment [sic] of USD 3,000,000 to the Claimant”.

b. Reply of the Respondent

15. In its reply (in which no evidence was provided) to the claim, the Respondent recognized to enter into the transfer agreement of the player.

16. However, Cruzeiro highlighted the following substantive submissions:

 As to the failure to comply with art.12bis of the FIFA RSTP / No overdue payments

- The first and second notice of default (December 2019; February 2020) should be deemed invalid because they did not fulfil the requirements established by the FIFA RSTP and the Transfer Agreement. Therefore, Cruzeiro never had the opportunity to remedy the non-payment of the second instalment agreed.

- On top of that, the Claimant never invoked art. 12bis RSTP, consequently, under the longstanding CAS jurisprudence in this respect, the Players’ Status Committee is bound by the parties’ motions.

 Principle of ne bis in idem (Double jeopardy)

- A penalty of 10% over the outstanding amount in addition to default interest of 6% is disproportional and it would violate the fundamental principle of law ne bis in idem. Consequently, the Players’ Status Committee shall not impose any penalty except default interest at a rate of 5% p.a.

 Non ultra petitum

- The Claimant did not request the imposition of sanctions, therefore, there are no “legal grounds to impose any sanction” (extra petita doctrine).

- Furthermore, Pyramids has not provided any legal ground for the May, August and November instalments; so, the Players’ Status Committee should not decide on them (non ultra petitum rule).

17. As such, the Respondent is of the position that the claim should be rejected and the Claimant should bear the proceeding fees.

III. CONSIDERATIONS OF THE SINGLE JUDGE OF THE PLAYER’S STATUS COMMITTEE

a. Admissibility

18. First of all, the Single Judge of the Players’ Status Committee (hereinafter: the Single Judge) analysed whether he was competent to deal with the present matter. In this respect, he took note that the present matter was submitted to FIFA on 24 April 2020. Taking into account the wording of art. 21 of the June 2020 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.

19. Subsequently, the Single Judge referred to art. 3 of the Procedural Rules and noted that in accordance with art. 23 par. 1 and 3 in combination with art. 22 lit. f) of the October 2020 edition of the Regulations on the Status and Transfer of Players, he is in principle competent to deal with the matter at stake, which concerns a contractual related dispute, concerning the transfer of a Brazilian player, between an Egyptian club and a Brazilian club of an international dimension.

20. In light of the above, the Single Judge is competent, on the basis of art. 22 lit. f) of the Regulations on the Status and Transfer of Players, to consider the present matter as to the substance.

b. Applicable legal framework

21. 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 confirmed that in accordance to art. 26 par. 1 and 2 of the October 2020 edition of the Regulations on the Status and Transfer of Players and considering that the present claim was lodged with FIFA on 24 April 2020, the June 2020 edition of the Regulations on the Status and Transfer of Players (hereinafter: the Regulations) is applicable to the present matter as to the substance.

c. Burden of proof

22. The Single Judge recalled the basic principle of burden of proof, as stipulated in art. 12 par. 3 of the Procedural Rules, according to which a party claiming a right on the basis of an alleged fact shall carry the respective burden of proof. Likewise, he stressed the wording of art. 12 par. 4 of the Procedural Rules, pursuant to which he may consider evidence not filed by the parties.

23. In this respect, the Single Judge also recalled that in accordance with art. 6 par. 4 of Annexe 3 of the Regulations, FIFA’s judicial bodies may use, within the scope of proceedings pertaining to the application of the Regulations, any documentation or evidence generated or contained in TMS.

d. Merits of the dispute

24. His competence 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 arguments and the documentation submitted by the parties. However, the Single Judge emphasised that in the following considerations it will refer only to the facts, arguments and documentary evidence, which it considered pertinent for the assessment of the matter at hand.

i. Main legal discussion and considerations

25. By doing so, the Single Judge noted that, on 16 January 2019, the parties concluded an agreement regarding the permanent transfer of the Brazilian player Mr Rodrigo Eduardo Costa Marinho ¨Rodriguinho¨ from the Claimant to the Respondent which, inter alia, defined a transfer fee of USD 7,000,000.

26. Subsequently, the Single Judge observed that the parties agreed in clause 2.8. of the Transfer Agreement, that the Respondent had to pay a fine of 10% on the full outstanding amount and an interest of 6% per year form the due date until the date of the payment (“in the event the [Respondent] fails to provide the payment of fee amount agreed above within the agreed a default interests shall be subject to the payment of the amount due plus a fine of 10% (ten per cent) on the full amount outstanding at the rate of 6% per year rate from the due date until the date of payment”).

27. In relation to said transfer, the Single Judge consequently observed that the Respondent only paid the first instalment in the amount of USD 1,000,000; however, the Respondent had failed to make the rest of the payments due on the Transfer Agreement at the date of the present decision.

28. Thereafter, the Single Judge took note that the Claimant lodged a claim before FIFA, by means of which it requested the payment of USD 3,000,000 corresponding to transfer fee overdue - i.e. from the second (November 2019) to the sixth instalments (November 2020) due as transfer fee - plus a default interest at rate of 5% per annum; as well as, the imposition of a 10% fine over each instalment plus the application of default interest at rate of 6% per annum.

29. In relation to said request, firstly, the Single Judge noted that the Respondent did not object to the completion of the transfer of the player, but contested the amount claimed. Therefore, at this stage, the Single Judge of the Players’ Status Committee 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”.

30. In application of the aforementioned provision, the Single Judge observed that, at the case at stake, the Respondent has not brought any evidence before the Players’ Status Committee.

31. Further, the Single Judge took particular note of the fact that, in December 2019 and February 2020, the Claimant put (and tried to put) the Respondent in default of payment USD 1,000,000, corresponding to the due instalments of November 2019 and February 2020, as well as, USD 50,000 (plus an interest of 6%) corresponding to the “contractual penalty” agreed, setting a 7 days’ time limit in order to remedy the default.

32. Subsequently, the Single Judge considered that the arguments raised by the Respondent cannot be considered a valid reason for non-payment. The Single Judge stressed that the reasons brought forward by the Respondent in its defence do not exempt the Respondent from its obligation to fulfil its contractual obligations towards the Claimant.

33. Consequently, the Single Judge concluded that the Respondent failed to pay USD 500,000 to the Claimant. Therefore, the Single Judge decided that, in accordance with the general legal principle of pacta sunt servanda, the Respondent is liable to pay to the Claimant overdue payables (due November 2019) in the total amount of USD 500,000.

34. Furthermore, the Single Judge recalled that the Claimant has requested the payment of the 3rd, 4th, 5th and 6th instalment of the transfer fee, that is to say from February 2020 to November 2020, plus a default interest at rate of 5% per annum; as well as, the imposition of a 10% fine over each instalment plus the application of default interest at rate of 6% per annum. In this context, the Single Judge deemed reasonable to grant Claimant’s request relating to the 3rd, 4th ,5th and 6th instalment of the transfer fee due, as it is should be considered to fall within the scope of art. 12bis of the RSTP.

35. Consequently, again, in accordance with the general legal principle of pacta sunt servanda, the Single Judge decided that the Respondent is also liable to pay to the Claimant overdue payables in the total amount of USD 2,500,000.

36. Furthermore, taking into consideration the Claimant’s request as well as the constant practice of Players’ Status Committee, the Single Judge decided to award the Claimant interest at the rate of 5% p.a. on the amount of USD 3,000,000 as from the respective due date until the date of effective payment.

37. In continuation, the Single Judge focussed the attention on the Claimant’s request for payment of the penalty amount of 10% over each instalment in accordance with the Transfer Agreement.

38. The Single Judge noted in this respect that, under the Regulations and the longstanding Players’ Status Committee jurisprudence in this respect, penalty clauses may be freely entered into by the contractual parties and may be considered acceptable, in the event that the pertinent written clause meets certain criteria such as proportionality and reasonableness. In this respect, the Single Judge remarked that in order to determine as to whether a penalty clause is to be considered acceptable, the specific circumstances of the relevant case brought before the deciding body shall also be taken into consideration.

39. In the specific case at hand, the Single Judge decided that the penalty fee of 10% of the outstanding instalment in the case at hand is both proportionate and reasonable. In addition, the Single Judge wished to highlight that such rate was voluntarily agreed upon between the parties and is therefore to be applied in the present case. Therefore, the Single Judge decided that the Respondent have to pay to the Claimant the penalty fee amounting to USD 300,000.

40. In continuation, concerning Claimant’s request for interest on the penalty fee as of its due date. The Single Judge recalled the jurisprudence of the Players’ Status Committee according to which no interest is due over a late payment of a penalty fee. Therefore, the Single Judge noted in this respect that this request should not be granted, and consequently the Single Judge rejected the Claimant’s request for interest on the penalty fee.

41. For the sake of completeness, the Single Judge pointed out that any claim pertaining to the payment due in January 2022 is premature.

42. Furthermore, taking into account the previous considerations, the Single 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.

43. In this regard, the Single 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.

44. Therefore, bearing in mind the above, the Single Judge decided that, in the event that the Respondent does not pay the amounts due to the Claimant within 45 days as from the moment in which the Claimant, following the notification of the present decision, communicates the relevant bank details to the Respondent, a ban from registering any new players, either nationally or internationally, for the maximum duration of three entire and consecutive registration periods shall become effective on the Respondent in accordance with art. 24bis par. 2 and 4 of the Regulations.

45. Furthermore, the Single 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.

46. Finally, the Single Judge concluded his deliberations by confirming that any further claim of the Claimant shall be rejected.

e. Costs

47. 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 the proceedings before the Players’ Status Committee and the Single Judge, 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 and are normally to be paid by the unsuccessful party.

48. In this respect, the Single Judge reiterated that the Claimant’s claim is partially accepted and that the arguments raised by the Respondent were fully rejected. Therefore, the Single Judge decided that the Respondent shall bear the entirety of costs of the current proceedings in front of FIFA.

49. The Single Judge further observed the temporary amendments outlined in art. 18 par. 1 lit. ii) of the Procedural Rules, which entered in force in 10 June 2020, according to which the maximum amount of procedural costs levied for any claim lodged prior to 10 June 2020, which was yet to be decided at the time of such temporary amendment, shall be equivalent to any advance of costs paid.

50. Accordingly, the Single Judge observed that the Claimant paid the amount of CHF 5,000 as advance of costs, and therefore decided that the maximum amount of costs of the proceedings corresponds to CHF 5,000.

51. Consequently, the Single Judge determined that the Respondent shall pay the amount of CHF 5,000 in order to cover the costs of the present proceedings.

52. Subsequently, the Single Judge reverted to art. 17 par. 5 in combination with art. 18 of the Procedural Rules, and observed that the advance of costs paid by a party shall be duly considered in the decision regarding costs. Therefore, given that the Respondent is responsible to pay the entirety of the procedural costs, the Single Judge decided that the amount paid by the Claimant as advance of costs shall be reimbursed to the latter by FIFA.

53. For the sake of completeness, the Single Judge referred to art. 18 par. 4 of the Procedural Rules, and decided that no procedural compensation was to be awarded in these proceedings.

IV. DECISION OF THE SINGLE JUDGE OF THE PLAYERS' STATUS COMMITTEE

1. The claim of the Claimant, PYRAMIDS FC, is partially accepted.

2. The Respondent, CRUZEIRO ESPORTE CLUB, has to pay to the Claimant, the amount of Unites States Dollar (USD) 3,000,000 as outstanding remuneration plus interest of 5% p.a. as follows:

- On the amount of USD 500,000 as from 1 December 2019 until the date of effective payment;

- On the amount of USD 500,000 as from 1 March 2020 until the date of effective payment;

- On the amount of USD 1,000,000 as from 1 June 2020 until the date of effective payment;

- On the amount of USD 500,000 as from 1 September 2020 until the date of effective payment;

- On the amount of USD 500,000 as from 1 December 2020 until the date of effective payment.

3. The Respondent, CRUZEIRO ESPORTE CLUB, has to pay to the Claimant, the amount of USD 300,000 as penalty fee.

4. Any further claims of the Claimant are rejected.

5. The final costs of the proceedings in the amount of CHF 5,000 are to be paid by the Respondent to FIFA.

6. 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.

7. 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).

8. 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 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 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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