F.I.F.A. – Dispute Resolution Chamber / Camera di Risoluzione delle Controversie – labour disputes / controversie di lavoro (2016-2017) – fifa.com – atto non ufficiale – Decision 23 March 2017
Decision of the
Dispute Resolution Chamber
passed in Zurich, Switzerland, on 23 March 2017,
in the following composition:
Thomas Grimm (Switzerland), Deputy Chairman
Theo van Seggelen (Netherlands), member
Carlos González Puche (Colombia), member
Alejandro Marón (Argentina), member
Wouter Lambrecht (Belgium), member
on the claim presented by the player,
Player A, Country B,
as Claimant / Counter-Respondent
against the club,
Club C, Country D
as Respondent / Counter-Claimant
regarding an employment-related dispute
arisen between the parties
I. Facts of the case
1. On 19 June 2015, the Player of Country B, Player A (hereinafter: Claimant / Counter-Respondent or player) and the Club of Country D, Club C (hereinafter: Respondent / Counter-Claimant or club) signed an employment contract valid from 15 June 2015 until 15 November 2015. On 15 November 2015, the Claimant / Counter-Respondent and the Respondent / Counter-Claimant signed an ”additional agreement” providing that the employment contract was now valid until 30 November 2017.
2. The contract provides for monthly remuneration of Currency E 3,162,000 to be paid to the Claimant / Counter-Respondent. Furthermore, the contract provides that “the employer undertakes to pay all taxes and obligatory payments provided by the legislations of the Country D”.
3. The employment contract provides in its article 3.3 that “payment for delay time due to the fault of the Employer shall be fixed at the size of 50% from the average wage of the Employee and shall be paid at terms as prescribed by the Legislation of the Country D”.
4. The employment contract provides that “the termination of the present employment contract is drawn up by the act of the Employer. The employer has the right at its discretion to unilaterally terminate the contract without compensation”. The contract further provides “the Party of the present employment contract who caused damage (harm) to other Party compensates it according to the Labor Code and other laws of the Country D”.
5. On 16 November 2015, the Claimant / Counter-Respondent and the Respondent / Counter-Claimant signed an “appendix 2” to the employment contract, providing for total remuneration of USD 235,000 for the “Season 2016”:
a. USD 25,000 per month from January until July 2016;
b. USD 20,000 per month for August and September 2016;
c. USD 10,000 per month for October and November 2016.
6. On 16 November 2015, the Claimant / Counter-Respondent and the Respondent / Counter-Claimant signed an “appendix 3” to the employment contract, providing for total remuneration of USD 200,000 for the “Season 2017”, as follows:
a. USD 20,000 per month from January until September 2017;
b. USD 10,000 per month for October and November 2017.
7. After having previously done so on 22 August 2016, on 19 September 2016, the Claimant / Counter-Respondent put the Respondent / Counter-Claimant in default for a second time of a total of USD 161,104 pertaining to outstanding remuneration of USD 60,000 as a portion of June as well as July and August 2016, in addition to punitive damages on the basis of article 3.3 of the employment contract. In this regard, the Claimant / Counter-Respondent acknowledges receipt of the payment of USD 10,000 (which the Claimant / Counter-Respondent considers to be a de facto acknowledgment of debt), which only partially covers the outstanding remuneration for the month of June 2016, and none of July or August 2016. In addition, the Claimant / Counter-Respondent asserted that, in light of clause 3.3. of the contract, he is owed USD 101,104 in punitive damages.
8. On 3 October 2016, the Claimant / Counter-Respondent formally notified the Respondent / Counter-Claimant of the unilateral termination of the employment contract on the basis that the Respondent / Counter-Claimant is still in arrears of USD 60,000.
9. On 12 October 2016, and subsequently modified on 12 December 2016 after acknowledging receipt of the payment of USD 50,000, the Claimant / Counter-Respondent lodged a claim against the Respondent / Counter-Claimant in front of FIFA requesting to be paid a total of USD 429,900 plus 5% interest as follows:
a. USD 133,532 as total outstanding remuneration:
i. USD 10,000 as the unpaid portion of August 2016;
ii. USD 123,532 as punitive damages in line with art. 3.3 of the employment contract (cf. points 10 and 11 below).
b. USD 296,368 as compensation for breach of contract (cf. point 12 below);
c. the payment of legal expenses.
10. The Claimant / Counter-Respondent asserts having had just cause to terminate the employment contract on the basis of the outstanding remuneration due at the time of termination. With regard to the punitive damages as per clause 3.3 of the contract, the Claimant / Counter-Respondent claims that his average salary for the period running from January 2016 until November 2016 is USD 21,364 and that on the basis of a month having 30 days, 50% of his average daily salary amounts to USD 356. On the basis that his salary payments are due “before the 10th of the following month”, he claims that “the total daily delay of payment of each of his salaries” amounts to 347 days and that he is owed USD 356 x 347 days for a total of USD 123,532 as punitive damages.
11. At the time of the claim, the Claimant / Counter-Respondent provided the following indications regarding alleged late payments:
Month
Amount
Payable on
Paid on
Delay on day of termination January 2016
USD 25,000
10 February 2016
5 April 2016
55 days
February 2016
USD 25,000
10 March 2016
18 April 2016
39 days
March 2016
USD 25,000
10 April 2016
1 June 2016
52 days
April 2016
USD 25,000
10 May 2016
1 June 2016
22 days
May 2016
USD 25,000
10 June 2016
27 June 2016
17 days
June 2016
USD 25,000
10 July 2016
USD 10,000 paid on 9 September 2016
85 days
July 2016
USD 25,000
10 August 2016
Not Paid
54 days
August 2016
USD 20,000
10 September 2016
Not Paid
23 days
September 2016
USD 20,000
10 October 2016
October 2016
USD 10,000
10 November 2016
November 2016
USD 10,000
10 December 2016
Total: 347
12. With regard to the compensation claimed by the Claimant / Counter-Respondent, he asserts that he is owed USD 40,000 for September until November 2016. Thereafter, he considers that since there was no provision in the employment contract for the 2017 season, his monthly salary should be based on the salary average of 2016, i.e. USD 21,364. He therefore requests USD 256,368 as compensation.
13. In spite of having been invited to do so before 15 November 2016 at the latest, the Respondent / Counter-Claimant only replied to the claim of the Claimant / Counter-Respondent on 21 November 2016.
14. On 21 November 2016, the Respondent / Counter-Claimant lodged a counterclaim against the Claimant / Counter-Respondent on the basis of wrongful termination by the player, requesting the following:
a. sporting sanctions to be imposed on the Claimant / Counter-Respondent for wrongful termination of the employment contract without a valid reason;
b. USD 200,000 as compensation for early termination of the employment contract on the basis of the Claimant / Counter-Respondent’s claimed salaries for the 2017 season;
c. USD 100,000 as material and moral damages.
15. The Respondent / Counter-Claimant asserts that clause 3.3 of the contract does not refer to delays in payment, but rather to “down-time”. Furthermore, the Respondent
/ Counter-Claimant asserts that the Claimant / Counter-Respondent did not respect the procedure for termination, indicating that in spite of having put the club in default on 19 September 2016 and setting a ten-day deadline, he failed to terminate the contract on 29 September 2016, which would have been the tenth day following said default. In addition, it states that the payments of salaries did not fall due on the 10th of the following month.
16. In reply to the Respondent / Counter-Claimant’s counterclaim, the Claimant / Counter-Respondent acknowledged on 12 December 2016 receipt of the payment of salaries for June, July and August 2016 in the total amount of USD 50,000. He further reiterated that at least three monthly salaries were outstanding at the time of termination, that two default notices were sent and that the acknowledged payment made after the claim was lodged before FIFA and therefore does not deprive the termination of having been made with just cause. He adds that the termination was only made on 3 October 2016 since the default notice was only received by the club on 22 September 2016.
17. In reply to FIFA’s pertinent request the Claimant / Counter-Respondent stated that he signed an employment contract on 20 December 2016 valid from 25 January 2017 until 30 November 2017, providing for monthly remuneration of 30,000 Currency F.
II. Considerations of the Dispute Resolution Chamber
1. First, the Dispute Resolution Chamber (hereinafter also referred to as Chamber or DRC) analysed whether it was competent to deal with the case at hand. In this respect, it took note that the present matter was submitted to FIFA on 12 October 2016. Consequently, the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (2015 edition; hereinafter: the Procedural Rules) are applicable to the matter at hand (cf. article 21 of the Procedural Rules).
2. Subsequently, the members of the Chamber referred to art. 3 par. 1 of the Procedural Rules and confirmed that in accordance with art. 24 par. 1 in combination with art. 22 lit. b) of the Regulations on the Status and Transfer of Players (2016 edition), the Dispute Resolution Chamber is competent to deal with the matter at stake, which concerns an employment-related dispute with an international dimension between a Player of Country B and a Club of Country D.
3. Furthermore, the Chamber analysed which regulations should be applicable as to the substance of the matter. In this respect, it confirmed that in accordance with art. 26 par. 1 and 2 of the Regulations on the Status and Transfer of Players (2016 edition), and considering that the present claim was lodged on 12 October 2016, the 2016 edition of said regulations (hereinafter: the Regulations) is applicable to the matter at hand as to the substance.
4. The competence of the Chamber and the applicable regulations having been established, the Chamber entered into the substance of the matter. The Chamber started by acknowledging the facts of the case, as well as the documentation contained in the file. The Chamber, however, 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.
5. In this respect, the Chamber recalled that the parties had signed an employment contract valid from 15 June 2015 until 15 November 2015, the validity of which was extended until 30 November 2017. The Chamber equally noted that on 16 November 2015, the parties had signed an “appendix 2” providing for total remuneration of USD 235,000 for the “season 2016” and an “appendix 3” providing for total remuneration of USD 200,000 for the “season 2017”, as detailed in points I.5 and I. 6 above.
6. Furthermore, the members of the DRC noted that, on 12 October 2016, the Claimant / Counter-Respondent lodged a claim against the Respondent / Counter-Claimant maintaining that he had terminated the employment contract with just cause on 3 October 2016, after previously having put the club in default on 22 August 2016 and on 19 September 2016, since the Respondent / Counter-Claimant allegedly failed to pay the entirety of his remuneration due between June 2016 and August 2016, which he on 12 December 2016 acknowledged having been partially paid by the club after termination. Consequently, the Claimant / Counter-Respondent claims to be owed the remaining outstanding remuneration as well as punitive damages on the basis of art. 3.3 of the employment contract relating to remuneration allegedly paid by the club with delay, in addition to compensation for the breach of the employment contract. Finally, the Claimant / Counter-Respondent claimed interest of 5% over the requested amounts, as well as the payment of legal expenses.
7. Subsequently, the Chamber observed that the Respondent / Counter-Claimant, in spite of having been invited to do so, had, for its part, failed to present its response to the claim of the Claimant / Counter-Respondent within the time limit set by FIFA, i.e. 15 November 2016. In fact, the reply of the Respondent / Counter-Claimant was only received on 21 November 2016. As a result, bearing in mind the Chamber’s constant jurisprudence in this regard and in application of art. 9 par. 3 of the Procedural Rules, the Chamber decided not to take into account the reply of the Respondent / Counter-Claimant regarding the claim of the Claimant / Counter-Respondent and established that in accordance with the aforementioned provision, it shall take a decision on the claim of the Claimant / Counter-Respondent on the basis of the documents on file that were provided prior to the deadline set by FIFA, in casu, on the statements and documents presented by the Claimant / Counter-Respondent.
8. Finally, the DRC also noted that on 21 November 2016, i.e. before the closure of the investigation, the Respondent / Counter-Claimant lodged a counter-claim against the Claimant / Counter-Respondent, claiming that the latter had terminated the contract without just cause.
9. In view of the above, the members of the Chamber deemed that they must determine whether the Claimant / Counter-Respondent had in fact had a just cause to terminate the employment contract on 3 October 2016.
10. In this context, the Chamber took note that the Claimant / Counter-Respondent put the Respondent / Counter-Claimant in default on 22 August 2016 and on 19 September 2016 pertaining to outstanding remuneration for the months of June, July and August 2016.
11. In continuation, and with regards to the art. 9 par. 3 and 12 par. 3 of the Procedural Rules, the members of the Chamber took note that the Respondent / Counter-Claimant had not submitted evidence within the allocated time-limit to demonstrate that it had fulfilled its financial obligations towards the Claimant / Counter-Respondent, prior to the termination of the contract by the Claimant / Counter-Respondent on 3 October 2016. In this respect, the Chamber deemed it appropriate to point out that a partial or complete payment of outstanding amounts after the termination of the contract based on the non-payment of such amounts does not change the incompliance situation of the party in alleged breach on the date of termination and does not affect the possible justice of such termination by the party affected by the breach.
12. Consequently, the Chamber established that the Respondent / Counter-Claimant, without any valid reason, failed to remit to the Claimant / Counter-Respondent, until 3 October 2016, date on which the Claimant / Counter-Respondent terminated the contract, the total amount of USD 60,000, as a portion of June’s monthly salary as well as July and August 2016. Therefore, in accordance with its longstanding jurisprudence, the Chamber established that a considerable amount of remuneration, corresponding to the partial salary for June 2016 as well as the late salaries for July and August 2016, had remained unpaid by the club for a considerable period of time without a valid reason and consequently the player had a just cause to terminate the contract on 3 October 2016, and thus the Respondent / Counter-Claimant is to be held liable for the early termination of the employment contract with just cause by the Claimant / Counter-Respondent.
13. In view of all of the above and in particular taking into account the Claimant / Counter-Respondent’s acknowledgement of the payment on 12 December 2016 of USD 50,000 and taking into account that the Respondent / Counter-Claimant did not contest that the relevant salaries had remained unpaid, the Dispute Resolution Chamber decided that, in accordance with the general principle of pacta sunt servanda, the Respondent / Counter-Claimant must fulfil its contractual obligations towards the Claimant / Counter-Respondent for the time during which he rendered his services to it, and is to be held liable to pay the Claimant / Counter-Respondent the total amount of USD 30,000, as outstanding remuneration corresponding to the partially outstanding salary payment of August 2016 (USD 10,000) and also the full salary for services rendered for the entire month of September 2016 (USD 20,000), which the player had requested as part of compensation.
14. In continuation and with regard to the Claimant / Counter-Respondent’s request for interest, the members of the Chamber noted that the Claimant / Counter-Respondent was claiming certain amounts (cf. point I. 11 above) based on clause 3.3 of the contract, which states that “payment for delay time due to the fault of the Employer shall be fixed at the size of 50% from the average wage of the Employee and shall be paid at terms as prescribed by the Legislation of the Country D”. In this respect, the DRC observed that the Claimant / Counter-Respondent was arguing being entitled to 50% of his daily average salary per each day of the delay in the payment of his salaries.
15. In the specific case at hand and after due deliberation, the members of the Chamber concluded that the clause contained in art. 3.3 of the contract is, in fact, an interest rate, which clearly exceeds, in accordance with Swiss law, the maximum interest rate allowed. Consequently and in accordance with its well-established jurisprudence, the members of the Chamber decided to reduce this part of the Claimant / Counter-Respondent’s claim to 5% interest per year on the basis of the dates set by the Claimant / Counter-Respondent in the table that he provided (cf. point I. 11 above). In conclusion, the members of the Chamber decided that the Claimant / Counter-Respondent is entitled to receive interest at the rate of 5% p.a. over the outstanding remuneration as follows:
5% p.a. as of 10 September 2016 until the date of effective payment on the amount of USD 10,000;
5% p.a. as of 10 October 2016 until the date of effective payment on the amount of USD 20,000.
16. Furthermore, the Chamber decided that interest at a rate of 5% p.a. was also applicable over the amounts paid by the club with delay, in the following manner:
5% p.a. as of 10 February 2016 until 5 April 2016 on the amount of USD 25,000;
5% p.a. as of 10 March 2016 until 18 April 2016 on the amount of USD 25,000;
5% p.a. as of 10 April 2016 until 1 June 2016 on the amount of USD 25,000;
5% p.a. as of 10 May 2016 until 1 June 2016 on the amount of USD 25,000;
5% p.a. as of 10 June 2016 until 27 June 2016 on the amount of USD 25,000;
5% p.a. as of 10 July 2016 until 9 September 2016 on the amount of USD 10,000;
5% p.a. as of 10 July 2016 until 12 December 2016 on the amount of USD 15,000;
5% p.a. as of 10 August 2016 until 12 December 2016 on the amount of USD 25,000;
5% p.a. as of 10 September 2016 until 12 December 2016 on the amount of USD 10,000.
17. For determining the start date of the interest, the Chamber took into account the Claimant / Counter-Respondent’s request as well as his undisputed statement that his monthly remuneration was payable on the 10th day of the following month.
18. In continuation, having established that the Respondent / Counter-Claimant is to be held liable for the early termination of the employment contract with just cause by the Claimant / Counter-Respondent, the Chamber focused its attention on the consequences of such termination. In this regard, the members of the Chamber determined that the Respondent / Counter-Claimant was not only to pay the amount of USD 30,000 as outstanding remuneration and relevant interest over outstanding and delayed remuneration to the Claimant-Counter-Respondent, but also to pay compensation for breach of contract in conformity with art. 17 par. 1 of the Regulations.
19. Having stated the above, the Chamber turned to the calculation of the amount of compensation payable to the Claimant / Counter-Respondent by the Respondent / Counter-Claimant in the case at stake. In doing so, the members of the Chamber first recapitulated that, in accordance with art. 17 par. 1 of the Regulations, the amount of compensation shall be calculated, in particular and unless otherwise provided for in the contract at the basis of the dispute, with due consideration for the law of the country concerned, the specificity of sport and further objective criteria, including in particular, the remuneration and other benefits due to the player under the existing contract and/or the new contract, the time remaining on the existing contract up to a maximum of five years, and depending on whether the contractual breach falls within the protected period.
20. In application of the relevant provision, the Chamber held that it first of all had to clarify as to whether the pertinent employment contract contained a provision by means of which the parties had beforehand agreed upon an amount of compensation payable by the contractual parties in the event of breach of contract. In this regard, the Chamber established that no such specific compensation clause was included in the employment contract at the basis of the matter at stake, as the clause in point I.4 above in fine only establishes that “the Party of the present employment contract who caused damage (harm) to other Party compensated it according to the Labor Code and other laws of the Country D”, not providing for any further specification.
21. As a consequence, the members of the Chamber determined that the amount of compensation payable by the Respondent / Counter-Claimant to the Claimant / Counter-Respondent had to be assessed in application of the other parameters set out in art. 17 par. 1 of the Regulations. The Chamber recalled that said provision provides for a non-exhaustive enumeration of criteria to be taken into consideration when calculating the amount of compensation payable.
22. Bearing in mind the foregoing as well as the claim of the Claimant / Counter-Respondent, the DRC proceeded with the calculation of the monies payable to the player under the terms of the employment contract from October 2016 until November 2017, taking into account that the player’s remuneration until September 2016 is included in the calculation of the outstanding remuneration (cf. II. 13 above). Consequently, the Chamber concluded that the amount of USD 220,000 (i.e. remuneration as from October 2016 until November 2016) serves as the basis for the determination of the amount of compensation for breach of contract.
23. In continuation, the Chamber verified as to whether the Claimant / Counter-Respondent had signed an employment contract with another club during the relevant period of time, by means of which he would have been enabled to reduce his loss of income. According to the constant practice of the DRC, such remuneration under a new employment contract shall be taken into account in the calculation of the amount of compensation for breach of contract in connection with the player’s general obligation to mitigate his damages.
24. Indeed, on 20 December 2016, the Claimant / Counter-Respondent found employment with the Club of Country B, Club G. In accordance with the pertinent employment contract, which has been made available by the Claimant / Counter-Respondent, valid from 25 January 2017 until 30 November 2017, the Claimant / Counter-Respondent was entitled to receive a monthly salary of 30,000 Currency F. Consequently, the Chamber established that the value of the new employment contract concluded between the Claimant / Counter-Respondent and Club G for the period as from January 2017 until November 2017 amounted approximately USD 11,600.
25. Consequently, on account of all the above-mentioned considerations and the specificities of the case at hand, the Chamber decided that the Respondent / Counter-Claimant must pay the amount of USD 208,400 to the Claimant / Counter-Respondent, which was to be considered a reasonable and justified amount of compensation for breach of contract in the present matter.
26. Moreover, taking into consideration the Claimant / Counter-Respondent’s claim, the DRC decided to award the Claimant / Counter-Respondent interest at a rate of 5% p.a. on the amount of USD 208,400 as of 12 October 2016, i.e. the date of claim, until the date of effective payment.
27. In conclusion, for all the above reasons, the Chamber decided to partially accept the Claimant / Counter-Respondent’s claim and to reject any further claim lodged by the Claimant / Counter-Respondent. Moreover, the members of the Chamber concluded its deliberations in the present matter by establishing that the Counter-Claim of the Respondent / Counter-Claimant is rejected.
III. Decision of the Dispute Resolution Chamber
1. The claim of the Claimant / Counter-Respondent, Player A, is partially accepted.
2. The Respondent / Counter-Claimant, Club C, has to pay to the Claimant / Counter-Respondent within 30 days as from the date of notification of this decision, an interest of 5% per annum as follows:
a. 5% p.a. as of 10 February 2016 until 5 April 2016 on the amount of USD 25,000;
b. 5% p.a. as of 10 March 2016 until 18 April 2016 on the amount of USD 25,000;
c. 5% p.a. as of 10 April 2016 until 1 June 2016 on the amount of USD 25,000;
d. 5% p.a. as of 10 May 2016 until 1 June 2016 on the amount of USD 25,000;
e. 5% p.a. as of 10 June 2016 until 27 June 2016 on the amount of USD 25,000;
f. 5% p.a. as of 10 July 2016 until 9 September 2016 on the amount of USD 10,000;
g. 5% p.a. as of 10 July 2016 until 12 December 2016 on the amount of USD 15,000;
h. 5% p.a. as of 10 August 2016 until 12 December 2016 on the amount of USD 25,000;
i. 5% p.a. as of 10 September 2016 until 12 December 2016 on the amount of USD 10,000.
3. The Respondent / Counter-Claimant has to pay to the Claimant / Counter-Respondent, within 30 days as from the date of notification of this decision, outstanding remuneration in the amount of USD 30,000 plus 5% interest p.a. as follows:
a. 5% p.a. as of 10 September 2016 until the date of effective payment on the amount of USD 10,000;
b. 5% p.a. as of 10 October 2016 until the date of effective payment on the amount of USD 20,000.
4. The Respondent / Counter-Claimant has to pay to the Claimant / Counter-Respondent within 30 days as from the date of notification of this decision, compensation for breach of contract in the amount of USD 208,400 plus 5% interest p.a. as of 12 October 2016 until the date of effective payment.
5. In the event that the amounts plus interest due to the Claimant / Counter-Respondent in accordance with the aforementioned numbers 2., 3. and 4. above are not paid by the Respondent within the stated time limits, the present matter shall be submitted, upon request, to the FIFA Disciplinary Committee for consideration and a formal decision.
6. Any further claim lodged by the Claimant / Counter-Respondent is rejected.
7. The counterclaim of the Respondent / Counter-Claimant is rejected.
8. The Claimant / Counter-Respondent is directed to inform the Respondent / Counter-Claimant immediately and directly of the account number to which the remittances are to be made and to notify the Dispute Resolution Chamber of every payment received.
*****
Player A, Country B / Club C, Country D
13/12
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
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 Dispute Resolution Chamber:
Omar Ongaro
Football Regulatory Director
Encl. CAS directives