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 15 December 2016

Decision of the

Dispute Resolution Chamber

passed in Zurich, Switzerland, on 15 December 2016,

in the following composition:

Thomas Grimm (Switzerland), Deputy Chairman

John Bramhall (England), member

Mario Gallavotti (Italy), member

on the claim presented by the club,

Club A, country B,

as Claimant / Counter-Respondent

against the player,

Player C, country D,

as Respondent 1 / Counter-Claimant

and the club,

Club E, country F

as Respondent 2

regarding an employment-related dispute between the parties

I. Facts of the case

1. On 25 July 2014, the player from country D, Player C (hereinafter: the Respondent 1 / Counter-Claimant or the player), and the club from country B, Club A (hereinafter: the Claimant / Counter-Respondent or Club A), signed an employment contract valid from 1 August 2014 until “the end of the season 2015/2016”, i.e. 30 June 2016.

2. In accordance with the employment contract, the player was inter alia entitled to receive the following remuneration:

a. 30,000 per month for the 2014/15 season;

b. 30,000 per month for the 2015/16 season;

c. 2,104,000 as a sign-on fee payable:

i. 35% upon receipt of the ITC;

ii. 35% on 31 December 2014;

iii. 30% on 30 June 2015;

d. 2,440,000 payable in three instalments.

3. The contract provided in its article 7 that “for the duration of the contract, and if [Club A] receives an offer of a higher value than USD 800,000, [Club A] commits to release the Player C”.

4. On 11 November 2014, the player and Club A signed a mutual termination agreement providing in its clause 2 that “after the signature of the present termination agreement, the player declares having received all arrears and has no claim to make and consequently discharges [Club A]”. The mutual termination agreement equally provided in its clause 3 that “the Player C declares that it has been agreed that he will pay [Club A] the amount of USD 150,000 within ten days of him signing a new professional player’s contract with his new club” and that “in case the Player C does not respect this release provision [Club A] reserves its right to oppose the delivery of the ITC and the amount shall remain due until the end of the initial contract”.

5. On 17 November 2014, the player sent notice to Club A that he contested the signed mutual termination agreement stating that the termination is disproportionate, adding that Club A had never paid the salaries of October or November 2014, or even the first portion of the sign-on fee. He therefore states that Club A is in default of 736,400 and the two monthly salaries in the total amount of 60,000, and notes that Club A claims to be owed USD 150,000 from the player. He states that he considers the mutual termination to be null and void, and will not request the allegedly outstanding remuneration as long as Club A does not request the USD 150,000 and unconditionally issues the player’s ITC.

6. On 8 June 2015, Club A lodged a claim against the player and his new club from country F, Club E (hereinafter: the Respondent 2 or Club E), claiming the following:

a. USD 150,000 on the basis of the mutual termination agreement, plus 5% interest from the date the player and Club E signed their employment contract;

b. USD 650,000 as compensation;

c. EUR 10,000 as legal fees.

7. Club A asserted that after having participated the in pre-season and the opening games of the 2014/15 sporting season, on 4 November 2014, the player allegedly verbally informed Club A of his will to mutually terminate the employment contract tying him with Club A. It continued by stating that in light of the prejudice caused to Club A, it would allow the contract to be mutually terminated on the condition that should the player find employment elsewhere during the time the contract was set to last, he would have to pay the club USD 150,000 within ten days of signing said new employment contract.

8. Club A further asserted that on 20 December 2014, the player and Club E signed an employment contract. Club A notes that Club E requested the delivery of the player’s ITC on 19 January 2015, which Club A refused in consideration of having not received the amount of USD 150,000 allegedly owed by the player.

9. Club A claimed that in line with the legal principle of pacta sunt servanda, the player owes it USD 150,000 in line with the mutual termination agreement, and considers that Club E should be considered jointly liable to pay said amount in consideration of the obligation of each club to perform due diligence in establishing whether the player is free of contract. It claimed that Club E was undoubtedly aware of the mutual termination agreement made between Club A and the player.

10. Furthermore, Club A claimed that Club E was an accomplice to the termination of the employment contract. It asserted that, knowing that the release of the player from his obligations with Club A was only possible upon payment of USD 800,000, Club E induced the player to breach the contract so as to not have to pay the aforementioned amount. Club A therefore considers Club E and the player should pay the difference between the amount set in the release clause of the contract and the amount set during the mutual termination, i.e. USD 650,000, notably as Club A would never have accepted to release the player for less than 20% of the value of the initial release clause.

11. In his reply to the claim, the player asserted that after signing the employment contract Club A had not respected its obligations on multiple occasions, notably by not paying the first portion of the sign-on fee, and consequently sought to have the contract mutually terminated. He states that he had understood that the mutual termination would be made without any mutual obligations, notably that the player would not claim any of the allegedly outstanding remuneration in return for being considered a free player. He subsequently contested the mutual termination signed between the parties.

12. The player claimed that he signed the mutual termination under duress stating that he was subject to threats and various pressures, before adding that the mutual termination is clearly imbalanced and disproportionately in favour of Club A and should be considered null and void. In addition, the player asserted that his knowledge of French was insufficient to fully understand the document he was signing. In spite of the fact that the termination should be considered null and void the player asserted that he should not have to return to Club A and should continue his employment relationship with Club E.

13. The player asserted that Club A had not provided any substantiating evidence that Club E and the player had together sought to avoid the payment of USD 800,000 in accordance with the contract’s article 7 and therefore rejects the claim for compensation of USD 650,000. He additionally claimed that if the application of the principle of pacta sunt servanda were to apply to the mutual termination agreement, then any request for additional compensation shall be rejected in light of the specific clause contained in said agreement, i.e. the payment of USD 150,000 only.

14. Consequently, the player lodged a counterclaim against Club A stating that the mutual termination agreement was void, thereby entitling him to the entire value of the contract minus 30,000 which he acknowledges were paid to him, totalling 5,204,000. The player lodged a subsidiary counterclaim whereby he requested to be paid the outstanding remuneration and outstanding portion of the sign-on fee, which he considers to be “1,175,450”. Finally, the player also claims that the fact that he was not paid between the signing of his contract with Club E and his official registration on 11 March 2015 is due to the clear bad faith of Club A, who must assume the responsibility for his loss in earnings: consequently, he requests to be paid a total of 383,000 pertaining to four monthly salaries as well as the portion of the sign-on fee due. He equally claims to be owed EUR 10,000 as legal fees.

15. In response to the player’s counterclaim, Club A asserted that the mutual termination agreement was balanced and bilaterally negotiated. It stated that, in signing the termination agreement, Club A would lose out on the possibility of receiving USD 800,000 which was provided for in the contract as a condition for the release of the player. Club A further notes that the player had not presented any evidence concerning the alleged duress under which he was supposed to have signed the mutual termination agreement. Furthermore, Club A contests that the player’s capacities to speak French were limited, noting that he is from country D, where the official language is French, and that he spent nine years in country G in various clubs. Club A continued by reasserting its aforementioned arguments.

16. In spite of having been invited to do so, Club E did not provide any comment for the duration of the procedure.

17. From the information contained on the Transfer Matching System, the player signed an employment contract with Club E, valid from 1 January 2015 until 31 May 2015, during which time he would be entitled to a monthly salary of USD 30,000. The player does not appear to have signed any other contract.

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 matter at hand. In this respect, it took note that the present matter was submitted to FIFA on 8 June 2015. 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. art. 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 and par. 2 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 from country D, a club from country B and a club from country F.

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 8 June 2015, the 2015 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. In this respect, the Chamber started by acknowledging all the aforementioned facts as well as the arguments and the documentation submitted by the parties. 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. In particular, the Chamber 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 Transfer Matching System (TMS).

5. Having established the above, the Chamber recalled that the player and Club A had signed an employment contract valid from 25 July 2014 until “the end of the season 2015/2016”, i.e. 30 June 2016.

6. Furthermore, the members of the Chamber acknowledged that the player and Club A signed a termination agreement on 11 November 2014 providing inter alia that “after the signature of the present termination agreement, the player declares having received all arrears and has no claim to make and consequently discharges [Club A]” and the player “will pay [Club A] the amount of USD 150,000 within ten days of him signing a new professional player’s contract with his new club”.

7. In continuation, the Chamber noted that Club A lodged a claim against the player asserting he owes it USD 150,000 on the basis of the mutual termination agreement and considering that the player signed a new contract with Club E. The DRC also noted that Club A claimed that Club E should pay the difference between the release clause in the employment contract and the amount established in the mutual termination agreement, since it was allegedly aware of the value of the release clause and sought to avoid making the relevant payment by inducing the player to terminate his employment relationship with Club A.

8. On the other hand, the members of the Chamber noted that the player had contested the termination agreement claiming that the reason for seeking to terminate the employment contract was because Club A had not respected its financial obligations towards him. The Chamber acknowledged that the Claimant lodged a counterclaim against Club A by means of which he claims to be entitled to the entire residual value of the employment contract, and subsidiarily claimed to be owed his alleged outstanding remuneration.

9. The DRC further noted that the player asserted having signed the mutual termination agreement under duress, that he did not understand the language, and that the clause contained in the mutual termination agreement is imbalanced, in favour of Club A and should therefore be considered null and void. The Chamber also noted that the player rejects Club A’s claim for further compensation on the basis of pacta sunt servanda, and claims that any potential compensation payable should be limited to USD 150,000.

10. The members of the Chamber also took note that Club E was given the opportunity to reply to the allegations of the player and Club A, but that Club E had failed to present its response in this respect. In this way, the Chamber deemed that Club E had renounced to its right of defence and, thus, accepted the allegations presented. Consequently, the Chamber established that in accordance with art. 9 par. 3 of the Procedural Rules, it shall take a decision on the basis of the documentation on file, i.e. the documentation presented by the player and Club A.

11. With regard to the above, the Chamber first deemed it important to note that the terms of the mutual termination agreement signed between the player and Club A unambiguously stipulate that Club A had fulfilled all of its financial obligations up to the time of termination, i.e. 11 November 2014, and that the player had nothing to claim against Club A. Indeed, the members of the Chamber deemed that clause 2 of the termination agreement is clear and leaves no room for interpretation. The DRC, therefore, rejected the player’s argument relating to alleged outstanding remuneration and concluded that there were no outstanding sums owed to the player.

12. In continuation, with regard to the player’s assertion that he had signed the contract under duress, the Chamber noted that Club A rejects this allegation. In this regard, and in reference to the aforementioned art. 12 par. 3 of the Procedural rules, the DRC took into account that the player failed to present any documentary evidence in support of his allegation that he had been forced to sign the mutual termination agreement under duress. Consequently, the DRC decided that the Claimant’s allegations in this regard cannot be accepted. Furthermore, for the sake of completeness, the Chamber also decided to reject the player’s claim that the mutual termination agreement should not be valid in light of the language of said document, which he allegedly did not understand, by emphasising that, in accordance with its longstanding jurisprudence, a party signing a document of legal importance without knowledge of its precise content, as a general rule, does so on its own responsibility. In light of this, and the content of art. 12 par. 3, the Chamber decided to reject the player’s argument in this regard.

13. The Dispute Resolution Chamber subsequently went on to address the issue of the validity of clause 3 of the mutual termination agreement. In this regard, the Chamber recalled that whereas the player argued that since the clause is clearly imbalanced and disproportionately in favour of the club, it should be considered null and void, Club A stated that the mutual termination agreement was freely negotiated between the parties and is proportionate in light of the release clause contained in the employment contract. The DRC further recalled that Club A asserted it would not have released the player had it not been for the clause contained in the termination agreement.

14. In light of the above and the diverging opinions of the parties to the present matter, the members of the Chamber then sought to determine whether the clause contained in the termination agreement, i.e. the clause providing for the payment by the player of USD 150,000 to Club A in case the player signs a new employment contract, is valid or not.

15. In this regard, after due deliberation, the members of the Chamber were of the opinion that clauses such as the one at hand 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 Chamber emphasised that in determining whether such a clause is valid or not, the specific circumstances of the relevant case brought before it shall also be taken into consideration.

16. Consequently, in light of all the aforementioned considerations, in particular those to be found in point II./12 above, the Chamber deemed that the relevant clause was freely negotiated and accepted by the parties, thereby rendering each party fully aware of the consequences of the player signing with a new club. Therefore, the members of the Chamber deemed that said clause is valid and applicable, and that in principle the player would have to pay Club A USD 150,000.

17. In continuation, the Chamber focused its attention on the proportionality of the clause. In this regard, the Chamber took into account the amount the player had earned before the termination, the residual value of the player’s contract at the time of termination, i.e. approximately 4,400,000, as well as the release clause contained in the employment contract, i.e. release conditioned by the payment of USD 800,000, the freely negotiated clause providing for the payment by the player of USD 150,000 upon signing a new employment contract is considered by the members of the Chamber to be proportionate and rejected the player’s arguments in this regard. For the sake of completeness, the Chamber sought to emphasise that the proportionality of the relevant clause should be analysed at the moment of the signing of the mutual termination agreement. Therefore, in the Chamber’s view, by determining an exact and specific sum at the time of termination without establishing any provisions relating to other future events, the parties themselves acknowledged the proportionality of the relevant clause at the time of the termination.

18. Consequently, having established that such a clause is valid and applicable, and is to be considered as proportionate in the present matter, the members of the Chamber partially accepted Club A’s claim and decided that in accordance with the general legal principle of pacta sunt servanda, the player is liable to pay to Club A the amount of USD 150,000.

19. In addition, taking into consideration the Claimant’s claim and bearing in mind that the player had signed an employment contract with Club E valid from 1 January 2015, the Chamber decided that the player must pay to Club A interest of 5% p.a. on the amount of USD 150,000 as of 1 January 2015 until the date of effective payment.

20. In continuation, the Chamber decided that the claim lodged by Club A against Club E is rejected in light of the lack of any contractual basis.

21. Finally, with regard to the claimed legal expenses, the Chamber referred to art. 18 par. 3 of the Procedural Rules as well as to its long-standing jurisprudence, in accordance with which no procedural compensation shall be awarded in proceedings in front of the Dispute Resolution Chamber. Consequently, the Chamber decided to reject Club A’s request relating to legal expenses.

22. The Dispute Resolution Chamber concluded its deliberations in the present matter by establishing that any further requests filed by Club A are rejected and that the counterclaim of the player is also rejected.

*****

III. Decision of the Dispute Resolution Chamber

1. The claim of the Claimant / Counter-Respondent, Club A, is partially accepted.

2. The counterclaim of the Respondent / Counter-Claimant, Player C, is rejected.

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, the amount of USD 150,000 plus 5% interest p.a. from 1 January 2015 until the date of effective payment.

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

5. Any further claim lodged by the Claimant / Counter-Respondent is rejected.

6. The Claimant / Counter-Respondent is directed to inform the Respondent / Counter-Claimant immediately and directly of the account number to which the remittance is to be made and to notify the Dispute Resolution Chamber of every payment received.

*****

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:

Marco Villiger

Deputy Secretary General

Encl.: CAS directives