F.I.F.A. – Dispute Resolution Chamber / Camera di Risoluzione delle Controversie – solidarity contribution / contributo di solidarietà – (2019-2020) – fifa.com – atto non ufficiale – Decision 24 July 2019

Decision of the

Single Judge of the sub-committee of the Dispute Resolution Chamber (DRC)

passed in Zurich, Switzerland, on 24 July 2019,

by Roy Vermeer (the Netherlands),

Single Judge of the sub-committee of the DRC,

on the claim presented by the club,

Club A, from country A

as Claimant

against the club,

Club B, country B

as Respondent

regarding solidarity contribution in connection with the transfer

of the player X

I. Facts of the case

1. According to the player passport and a confirmation issued by the Football Association of country A, the player, Player X (hereinafter: the player), born on 15 January 1994, was registered with the club, Club A, from country A (hereinafter: the Claimant) as from 1 September 2004 until 14 October 2014.

2. Moreover, according to the confirmation received from the Football Association, of country A the football season in country A during the period of time the player was registered with the Claimant started on 1 October and ended on 30 September of the following year.

3. After having signed a first employment contract on 25 March 2016, the club, Club Z, from country Z (hereinafter: Club Z) and the player signed a new employment contract on 15 January 2017, valid as from 1 January 2017 until 30 June 2021 (hereinafter: the employment contract), which stipulated in its art. 9.2 the following: “In case of a request the second party (the player) to leave the club during the current term of the contract in this case he must pay the amount of $ 6,500,000 (only six million and five hundred thousand US dollars) as a penal order to achieve the application of the penalty clause thus the need for the player’s commitment to: be informed of the company [ [Club Z] in writing 20 days before the closing of the period under and record players. The payment of the penalty clause before the…” (note: no further specification in the English text of the second employment contract).

4. On 17 January 2017, Club Z, from country Z concluded a loan transfer agreement with the club, Club B, from country B (hereinafter: the Respondent), in order to transfer the player from Club Z to the Respondent on a temporary basis as from 17 January 2017 until 30 June 2017. In this respect, Club Z and the Respondent agreed upon a loan transfer compensation amounting to USD 1,000,000 to be paid by the Respondent to Club Z.

5. According to the player passport issued by the Football Association of country Z dated 24 January 2017, uploaded in the context of the transfer instruction in Transfer Matching System (TMS) regarding the loan transfer of the player from Club Z to the Respondent, the player was registered with Club Z as from 7 January 2016 until 19 January 2017. This player passport does not contain any other information regarding the registration of the player with any other clubs.

6. Furthermore, according to the information contained in the TMS, the player was registered with the Respondent on 24 January 2017.

7. On 11 June 2017, the player sent a letter to Club Z titled “Subject: Termination of a contract of Professional Football Player”, in which he referred to article 9.2 of the new employment contract and notified the Respondent about its termination of the latter pursuant to said article.

8. On 21 June 2017, the player and Club Z signed a document titled “Termination Agreement”, by means of which it was declared that the employment contract was unilaterally terminated by the player in accordance with art. 9.2 of the contract and the amount of “USD 5,500,000”, would be transferred from the account of the player, or “who represents him” and it would be deposited in the account of Club Z.

9. On 23 June 2017, the Player and the Respondent signed an employment contract valid as from 2 July 2017 until 20 June 2021.

10. On 22 August 2018, the Claimant lodged a claim in front of FIFA against the Respondent, claiming its proportion of the solidarity contribution in connection with the loan transfer of the player from Club Z to the Respondent of January 2017, as well as the ensuing permanent transfer of the player from Club Z to the Respondent in June 2017. In particular, the Claimant requested 5% of the total amount received by Club Z in the context of the loan and the subsequent permanent transfer of the player, calculated by the Claimant in the amount of USD 365,000, plus 5% interest p.a. on said amount as from “the day it became due until today”.

11. According to the Claimant, before the end of the loan of the player from Club Z to the Respondent, Club Z received offers from the Respondent, amongst other clubs, for the definitive transfer of the player. The Claimant maintained that Club Z informed both the player and the Respondent that should “the player wants to leave…, the amount of 6.5 million USD has to be paid for the player to be released”.

12. In this context, the Claimant sustained that Club Z was paid the amount of USD 6,500,000, in accordance with art. 9.2 of the employment contract it had signed with the player on 15 January 2017, as a consequence of which the player was released and, subsequently, permanently registered with the Respondent.

13. Along this line, the Claimant was of the opinion that “(the player) could have not afforded to pay the amount of the Buy-out clause, unless a third party club would pay the amount of the Buy-out clause”.

14. In this regard, the Claimant deemed to be entitled to receive solidarity contribution on the basis of the loan from Club Z to the Respondent, as well as for the subsequent permanent transfer from Club Z to the Respondent. The Claimant held that the total amount paid as loan and transfer compensation by the Respondent to Club Z was USD 7,300,000 and calculated the amount due as solidarity contribution as USD 365,000, i.e. requesting 5% of the total transfer compensation in the alleged amount of USD 7,300,000.

15. The Respondent, on its part, rejected the Claimant’s claim.

16. In its reply, as to the loan transfer of the player from Club Z, the Respondent confirmed that it paid USD 1,000,000 as loan transfer compensation to Club Z, however, it deemed that the Claimant is not entitled to receive solidarity contribution and thus it was not obliged to pay it, since the player passport issued by the Football Association of country Z uploaded in the TMS in the context of this loan transfer “showed no clubs trained and educated the Player except the Former Club”.

17. Regarding the subsequent permanent transfer of the player from Club Z to the Respondent, the Respondent explained that, on 21 June 2017, the player terminated his employment relationship with Club Z. Furthermore, the Respondent confirmed that, subsequently, i.e. 2 days later, it entered into the second contract with the player.

18. In this context, the Respondent argued that, when entering into the second contract with the player, the latter did not move during the course of the contract with Club Z and that it did not pay Club Z “any compensation except the loan fee”.

19. Along this line, the Respondent sustained that solidarity contribution is not due for the following reasons:

”

a) No transfer agreement is signed with Club Z;

b) The player has not moved during the course/before the expiry of his employment contract with Club Z; and

c) No payment is paid by the Respondent to Club Z.”

20. In its replica, the Claimant rejected Respondent’s argumentation and insisted on its position.

21. In its duplica, the Respondent reiterated its position rejecting the claim.

II. Considerations of the Single Judge of the sub-committee of the DRC

1. First of all, the Single Judge of the sub-committee of the DRC (hereinafter: the Single Judge) analysed which Procedural Rules were applicable to the matter at hand. In this respect, it referred to art. 21 of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (hereinafter: the Procedural Rules) as well as to the fact that the present matter was submitted to FIFA on 22 August 2018. Therefore, the Single Judge concluded that the 2018 edition of the Procedural Rules is applicable to the matter at hand.

2. Subsequently, the Single Judge referred to art. 3 of the Procedural Rules, which states that he shall examine its jurisdiction in light of arts 22 to 24 of the Regulations on the Status and Transfer of Players (edition June 2019). In accordance with art. 3 of Annexe 6 in conjunction with art. 24 par. 3 and art. 22 lit. d) of the Regulations on the Status and Transfer of Players, the Single Judge is competent to decide on the present dispute relating to solidarity mechanism between clubs belonging to different associations handled through TMS.

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, the Single Judge confirmed that in accordance with art. 26 par. 1 and par. 2 of said Regulations (edition June 2019) and considering that the player was registered first time on loan with the Respondent on 24 January 2017 and was subsequently permanently transferred in June 2017, the 2016 edition of the Regulations on the Status and Transfer of Players (hereinafter: Regulations) is applicable to the matter at hand as to the substance.

4. The competence of the Single Judge and the applicable regulations having been established, the Single Judge entered into the substance of the matter. In this respect, the Single Judge started by acknowledging all 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 he will refer only to the facts, arguments and documentary evidence, which he considered pertinent for the assessment of the matter at hand. In particular, the Single Judge recalled that in accordance with art. 6 par. 3 of Annexe 3 of the Regulations, FIFA may use, within the scope of proceedings pertaining to the application of the Regulations, any documentation or evidence generated or contained in the TMS.

5. The Single Judge started by acknowledging that the Claimant is requesting the payment of 5% of both the total loan transfer fee and the subsequent permanent transfer fee, plus 5% interest p.a. as from the due dates until the date of effective payment, from the Respondent as solidarity contribution in connection with the international transfer of the professional player, Player X, from Club Z to the Respondent.

6. Furthermore, the Single Judge acknowledged that the Respondent confirmed the payment of USD 1,000,000 as loan transfer compensation to Club Z.

7. In continuation, the Single Judge took note that, on the one hand, the player and Club Z signed an employment contract valid as from 1 January 2017 until 30 June 2021, which stipulated the right of the player to terminate his employment contract against the payment of USD 6,500,000.

8. The Single Judge equally observed that it had been established that on 11 June 2017, the player informed Club Z of his intention to unilaterally terminate the employment contract. Furthermore, the Single Judge took note of the fact that on 21 June 2017, the player and Club Z signed a document titled “Termination Agreement”, by means of which it is declared that the employment contract is unilaterally terminated by the player in accordance with art. 9.2 of the contract and the amount of USD 5,500,000 shall be transferred from the account of the player, or “who represents him” and it shall be deposited in the account of Club Z.

9. Thus, in view of the above, the Single Judge concluded that it had been established and was not contested by the parties that the employment contract between the player and Club Z had terminated on 21 June 2017, as a result of the payment of the sum of USD 5,500,000 to Club Z.

10. The Single Judge further noted that the parties did not dispute that, on 23 June 2017, the player in question subsequently signed an employment contract with the Respondent, valid as from 2 July 2017 until 20 June 2021.

11. Furthermore, the Single Judge took note of the argument of the Claimant that the move of the player from Club Z to the Respondent should be considered as a transfer, taking into account that, by inserting the aforementioned buyout clause, Club Z gave its consent to transfer the player against the payment of USD 6,500,000 in advance, as an anticipated offer to a future move of the player. Moreover, the Claimant stressed that the player could have not afforded to pay the amount of the buyout clause, unless a third party club would pay the amount instead of the player.

12. Subsequently, the Single Judge continued by taking note of the arguments of the Respondent and, in particular, of the fact that when the latter entered into the permanent contract with the player, it did not pay Club Z any compensation except the loan fee.

13. Therefore, the Single Judge concluded that the underlying issue in the present matter was to establish wheather the ultimate payment of the amount indicated in the buyout clause, provided in art. 9.2 of the employment contract between Club Z and the player, constitited a transfer for the purposes of the solidarity mechanism system.

14. That said, the Single Judge was of the opinion that the substance of the transaction underneath the execution of buyout clauses and the purpose that such clauses serve must be always kept in mind. In this respect, the Single Judge wished to emphasise that the reality and the substance of the transactions should prevail on discussions about forms or schemes of transfers, even more so in cases – like the one at stake – where the ‘selling club’ freely decided to insert a buyout clause in the employment contract signed with the player.

15. Moreover, the Single Judge thought important to bear in mind that, although formally speaking these buyout clauses seem to require that the player pays the related amount himself, in reality most of the times, if not always, their amount is, as a matter of fact, not payable by a physical person. As it happens, players do not trigger buyout clauses by paying the, often enormous, amounts themselves. The clubs wanting to secure their services do so on their behalf.

16. In other words, buyout clauses, regardless of how they are drafted, constitute de facto an anticipated acceptance of a future possible transfer of a player against the relevant predetermined amount.

17. In this regard, the Single Judge highlighted that a sum was paid to the player's former club to enable him to terminate the employment contract before the contractually stipulated expiry date, with a view to being transferred to a new club. The Single Judge further stressed that the only difference resided in the fact that in the present case, the “transfer amount” was set bilaterally and the Respondent was not consulted at first. The Single Judge thus concluded that the facts of the present case constitute a transfer agreed to by Club Z in the terms it had offered at the time of concluding the employment contract with the player.

18. Futhermore, the Single Judge recalled that the “Termination Agreement”, which ended the contractual relationship between the player and Club Z, expressly stated that the amount of “USD 5,500,000” would be transferred from the account of the player, or “who represents him”, and it would be deposited in the account of Club Z.

19. Consequently, and in view of the above paragraphs, and bearing in mind the established jurisprudence of the DRC in this regard, the Single Judge decided that the execution of the buyout clause has to be considered a transfer in the sense of the Regulations and in particular with regard to art. 21 and art. 1 of Annexe 5 of the Regulations which clearly stipulates that if a professional moves during the course of a contract, 5% of any compensation, not including training compensation paid to his former club, shall be deducted from the total amount of this compensation. This is also in line with the spirit and the ratio of the Regulations, which basically provide that training clubs are entitled to a share of the solidarity contribution for any compensation paid by the new club to the former club. Therefore, the Single Judge concluded that the Respondent has to pay solidarity contribution to the Claimant, basing the compensation amount on the loan transfer fee, i.e. USD 1,000,000, as well as on the effective payment of USD 5,500,000.

20. In this regard, having confirmed the above-mentioned obligation incumbent on the Respondent, the Single Judge went on to establish the proper calculation of the relevant proportion of solidarity contribution due to the Claimant.

21. To that end, the Single Judge referred to art. 1 of Annexe 5 of the Regulations which provides the figures for the distribution of the solidarity contribution, according to the period of time the player was effectively trained by a specific club and taking into consideration the age of the player at the time he was being training and educated by the club(s) concerned.

22. In this respect, the Single Judge recalled that the Football Association of country A had confirmed that the player, born on 15 January 1994, was registered with the Claimant as from 1 September 2004 until 14 October 2014.

23. On account of the above and in accordance with art. 1 of Annexe 5 of the Regulations, the Single Judge considered that the Claimant is, thus, entitled to receive solidarity contribution for the period as from 1 September 2004 until 14 October 2014, i.e. during 12 months of the seasons of the player’s 12th to 20th birthdays. In terms of the percentage of the 5% solidarity contribution, the Single Judge calculated, that, on a pro rata basis, this corresponds to the 70% of the 5% of the total transfer compensation, as opposed to the 100% of the 5% of the total transfer compensation claimed by the Claimant.

24. In view of all of the above, taking into account that the transfer fee ultimately amounts to USD 6,500,000, the Single Judge decided that the Respondent has to pay the Claimant the amount of USD 227,500 as solidarity contribution in relation to the transfer of the player from Club Z to the Respondent.

25. Furthermore, and taking into consideration both the claim of the Claimant as well as art. 2 par. 1 of Annexe 5 of the Regulations, the Single Judge decided that the Respondent has to pay, in conformity with the longstanding practice of the DRC, interest at the rate of 5% p.a. as follows:

a. on the amount of USD 35,000 as from 24 February 2017;

b. on the amount of USD 192,500 as from 22 July 2017.

26. On account of the above, in accordance with art. 21 in combination with Annexe 5 of the Regulations, the Single Judge decided that the Respondent is liable to pay to the Claimant the amount of USD 227,500, plus 5% interest p.a. as of the abovementioned due dates, as solidarity contribution for the player, Player X.

27. 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 DRC relating to disputes regarding training compensation and the solidarity mechanism, costs in the maximum amount of CHF 25,000 are levied. It is further stipulated that the costs are to be borne in consideration of the parties’ degree of success in the proceedings and, in accordance with Annexe A of the Procedural Rules, the costs of the proceedings are to be levied on the basis of the amount in dispute.

28. In respect of the above, the Single Judge held that the amount to be taken into consideration in the present proceedings is USD 365,000, related to the claim of the Claimant. Consequently, the Single Judge concluded that the maximum amount of costs of the proceedings corresponds to CHF 25,000 (cf. table in Annexe A of the Procedural Rules).

29. As a result, considering the outcome of the claim, the Single Judge determined the final costs of the current proceedings to the amount of CHF 15,000, which shall be paid by both of the parties as follows: the amount of CHF 5,000 by the Claimant and the amount of CHF 10,000 by the Respondent to FIFA. Lastly, the Single Judge recalled that the Claimant has already paid the amount of CHF 5,000 as advance of costs at the start of the present proceedings and is therefore exempted from paying the aforementioned amount as costs of the proceedings.

30. The Single Judge concluded its deliberations in the present matter by establishing that any further claim lodged by the Claimant is rejected.

III. Decision of the Dispute Resolution Chamber

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

2. The Respondent, Club B, has to pay to the Claimant, within 30 days of the date of notification of this decision, the amount of USD 227,500, plus 5% interest p.a. until the date of effective payment as follows:

a) 5% p.a. on the amount of USD 35,000 as from 24 February 2017;

b) 5% p.a. on the amount of USD 192,500 as from 22 July 2017.

3. In the event that the aforementioned sum plus interest is not paid by the Respondent within the stated time limit, the present matter shall be submitted, upon request, to FIFA’s Disciplinary Committee for consideration and a formal decision.

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

5. The Claimant is directed to inform the Respondent immediately and directly of the account number to which the remittance is to be made and to notify the Single Judge of the sub-committee of the DRC of every payment received.

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

6.1. The amount of CHF 5,000 has to be paid by the Claimant directly to FIFA. Considering that the Claimant has already paid the amount of CHF 5,000 as advance of costs at the start of the present proceedings, the Claimant is exempted from paying the aforementioned amount as costs of the proceedings.

6.2. The amount of CHF 10,000 has to be paid by the Respondent directly to FIFA to the following bank account with reference to case no. TMS XXXX:

UBS Zurich

Account number 366.677.01U (FIFA Players’ Status)

Clearing number 230

IBAN: CH27 0023 0230 3666 7701U

SWIFT: UBSWCHZH80A

*****

Note relating to the motivated decision (legal remedy):

According to art. 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 (CAS)

Avenue de Beaumont 2

CH-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

sub-committee of the DRC:

Emilio García Silvero

Chief Legal & Compliance Officer

Encl. CAS directives