F.I.F.A. – Dispute Resolution Chamber / Camera di Risoluzione delle Controversie – labour disputes / controversie di lavoro (2017-2018) – fifa.com – atto non ufficiale – Decision 17 May 2018

Decision of the Dispute Resolution Chamber (DRC) judge

passed in Zurich, Switzerland, on 17 May 2018,

by Philippe Diallo (France), DRC judge

on the matter between the player,

Player A, Country B

as Claimant

and the club,

Club C, Country D

as Respondent

regarding an employment-related dispute

arisen between the parties

I. Facts of the case

1. The player from Country B, Player A (hereinafter: the Claimant) and the club from Country D, Club C (hereinafter: the Respondent) signed a document dated 12 July 2017 and referred to as "Letter of Offer" which included, inter alia, the following statement:

“we offer you a 4-month contract from July until November 2017 in which the total amount is 350.000.000 including expenses needed for return tickets from city in Country B to Country D (…) with the following conditions:

1. First payment is 110.000.000 (…) and paid upon signing of the contract between the [Respondent] and [the Claimant], while the remaining 240.000.000 (…) will be paid in 3 months amounted of 80.000.000 (…) per month from August until October 2017.”

2. First Payment will be used for:

- Reimbursement of return tickets (only for player) 15.000.000.-

- Applying (work permit)/visa 35.000.000.-

- Payment for Agent's commission 35.000.000,-

- Player 25.000.000.-“

3. Facilities:

i. 4-star hotel at Hotel X, Country D

ii. Family car

iii. Match bonuses

We expect you to come to Country D at the latest on July 19th 2017 to sign the contract and to start preparation with the team.

We are looking forward to hear your prompt response.”

2. On 26 September 2017, the Claimant lodged a claim before FIFA against the Respondent, and requested the payment of a total amount of (Currency of Country D) 352,159,000, plus interest “at the prevailing rate”, payable as from 8 August 2017 detailed as follows:

- 350,000,000, corresponding to the remuneration stated in the Letter of Offer;

- 2,159,000 as reimbursement for the Claimant‘s return flight to Country B.

3. According to the Claimant, on 18 July 2017, following the execution of the Letter of Offer, he travelled to Singapore to obtain a visa, which then would allow him to travel to Country D on 20 July 2017.

4. Subsequently, the Claimant stated that, on 25 July 2017, he successfully completed a medical examination at the request of the Respondent and that thereafter he was presented with a Professional Player Contract dated 21 July 2017 for execution.

5. Thereafter, the Claimant explained that, on 26 July 2017, the Respondent informed him that it would not be executing the contractual relationship since, due to the regulations of the Football Association of Country D, it would not be able to register the Claimant or procure his International Transfer Certificate (ITC).

6. As a result, the Claimant explained that, on 8 August 2017, he wrote to the Respondent in order to state that, effective immediately, he was terminating his employment for just cause due to the Respondent’s unilateral breach for failing to register him.

7. In its reply, the Respondent denied that there was any contractual relationship with the Claimant and asserted that no formal contract was signed between the parties.

8. In addition, the Respondent explained that the Claimant arrived on 22 July 2017, and exercised with the team only once, on 24 July 2017.

9. Furthermore, the Respondent confirmed that the Claimant did not pass the requirements of the Football Association of Country D in relation to foreign players.

10. Moreover, the Respondent stated that it “met and talked” with the Claimant “about the problem”, and accepted to pay the Claimant’s accommodation and transportation costs. However, according to the Respondent, the Claimant requested the payment of “one time a month’s salary” and that in this regard it “refuse[d] because [the Respondent] cancel[led] the contract plan with [the Claimant] because the terms and conditions of the strata and its verification do not pass the regulations of the first League of Country D.”

11. In his replica, the Claimant confirmed his previous arguments and considered that “there exists clear and unequivocal evidence to show that it was the intention of the Club and the [Claimant] to enter into a binding legal employment relationship and that the parties did, in fact, enter into such a relationship”.

12. In this regard, the Claimant highlighted that the Respondent signed the Letter of Offer on 15 July 2017.

13. Moreover, the Claimant considered that, in accordance with the jurisprudence of the DRC, it was the Respondent’s responsibility to ensure that the Claimant would be able to register in compliance with the Regulations of the Football Association of Country D.

14. As final comments, the Respondent considered that FIFA should not be competent as the matter is not employment related and insisted that there was never an employment relationship between the parties and therefore the claim should be rejected.

15. In particular, the Respondent considered that the Letter of Offer is merely an invitation to the Claimant in order for him to present himself in Country D to sign a future employment agreement and that there was never any employment relationship or employment agreement between the parties. In support of its arguments, the Respondent provided a copy of several conversations allegedly held on “Whatsapp Messenger” between the Claimant, his intermediary and a representative of the Respondent.

16. In addition, the Respondent explained that, “after undertaking the necessary due diligence”, it decided not to employ the Claimant as a professional footballer upon discovering that his registration would be refused by the Football Association of Country D (Football Association of Country D).

17. In the alternative, the Respondent further considered that, under any circumstance, even if there was a valid contract, it had an impossibility to comply with its obligations towards the Claimant for reasons not attributable to it and that, consequently, no compensation is due to the latter.

18. In the alternative, the Respondent considered that the basis for a hypothetically payable compensation would correspond to 280,000,000 (before mitigation) since, according to it, the work permit (35,000,000) and agent’s commission (35,000,000) do not form part of the remuneration of the Claimant. The Respondent further considered that the amount requested by the Claimant for the air tickets was already included in the letter of offer.

19. Furthermore, the Respondent requested the Claimant to pay the procedural costs as well as its legal costs and expenses, for a sum “no less than USD 20,000”.

20. In addition, and after being invited to do so, the Claimant informed FIFA that he did not conclude any new employment contract with any other club and that he only played at an amateur level with the club from Country B, Club E.

21. Finally, the Claimant submitted additional unsolicited comments following the closure of the investigation.

II. Considerations of the DRC judge

1. First of all, the DRC judge analysed whether he was competent to deal with the case at hand. In this respect, he took note that the present matter was submitted to FIFA on 26 September 2017. Consequently, the 2017 edition of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (hereinafter: the Procedural Rules) is applicable to the matter at hand (cf. art. 21 of the edition of the 2017 and 2018 editions of the Procedural Rules).

2. Subsequently, the DRC judge referred to art. 3 par. 1 of the Procedural Rules and confirmed that in accordance with art. 24 par. 1 and 2 in combination with art. 22 lit. b of the Regulations on the Status and Transfer of Players (edition 2018), the DRC judge is competent to deal with the matter at stake, which concerns an employment-related dispute with an international dimension between an player from Country B and an club from Country D.

3. Within this context, the DRC judge took note of the Respondent’s allegation, according to which FIFA should not be competent as the matter is not employment related since, in its opinion, there was never an employment relationship between the parties.

4. In this regard, and after examining the scope of the aforementioned allegation, the DRC judge observed that the parties acknowledged that they signed a document referred to as “Letter of Offer”. In this respect, the DRC judge wished to emphasize that the mere allegation from the Claimant that said document may be the basis of an employment relationship is sufficient to determine that the matter at stake is employment-related. In addition, the DRC judge understood that, from a procedural point of view, the discussion on whether there was a binding employment relationship between the parties is related to the substantive aspects of the matter at stake, but that the argument brought-up by the Respondent in this regard is irrelevant as to the admissibility of the claim.

5. After establishing his own competence, the DRC 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 with art. 26 par. 1 and 2 of the Regulations on the Status and Transfer of Players (editions 2016 and 2018), and considering that the present matter was submitted to FIFA on 26 September 2017, the 2016 edition of the aforementioned regulations (hereinafter: the Regulations) is applicable to the matter at hand as to the substance.

6. Having established the foregoing, and entering into the substance of the matter, the DRC judge continued by acknowledging the above-mentioned facts as well as the documentation contained in the file in relation to the substance of the matter. However, the DRC 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.

7. In continuation, the DRC judge duly noted that the Claimant and the Respondent signed a document dated 12 July 2017 and referred to as "Letter of Offer".

8. In this respect, the DRC judge observed that the Claimant lodged a claim against the Respondent in front of FIFA, on the basis of the aforementioned document, maintaining that it had a contractual nature.

9. Conversely, the DRC judge noted that the Respondent denied the contractual status of the aforementioned “Letter of Offer”, since it considered that it is merely an invitation to the Claimant in order for him to present himself in Country D to sign a future employment agreement and that there was never any employment relationship or employment agreement between the parties.

10. In view of the dissent existing between the parties, the DRC judge understood that, first of all, he had to assess the legal nature of the aforementioned document.

11. In this regard, the DRC judge recalled that, in order for an employment contract to be considered as valid and binding, apart from the signature of both the employer and the employee, it should contain the essentialia negotii of an employment contract, such as the parties to the contract and their role, the duration of the employment relationship, the remuneration and the signature of both parties. After a careful study of the “Letter of Offer” concluded between the parties, the DRC judge concluded that all such essential elements are included in the pertinent document, in particular, the fact that the contract establishes that the Claimant is entitled to receive remuneration, including a monthly salary, in exchange for his services to the Respondent as a player.

12. On account of all of the above, the DRC judge concluded that by having signed a document containing all the essentialia negotii on 12 July 2017, the parties indeed established between them a valid and binding employment relation and are, therefore, bound by the terms of the contract concluded between them.

13. Having established that a valid and legally binding employment contract had been in force between the Claimant and the Respondent, the DRC judge went on to analyse whether such contract had been breached and, in the affirmative, which party is to be held liable for breach of contract.

14. In this respect, the DRC judge noted that the Respondent acknowledged that the Claimant arrived to Country D on 22 July 2017 and that he exercised with the team on 24 July 2017 but that it ultimately decided to not conclude a contract with the Claimant since he did not pass the requirements of the Football Association of Country D in relation to foreign players.

15. In view of the above, the DRC judge understood that not only the parties concluded a valid and binding employment agreement (i.e. by signing the document referred to as “Letter of Offer”), but that said agreement was in fact executed, since the Claimant already exercised with the Respondent. Within this context, however, the DRC judge observed that the sole reason why the Respondent decided to not pursue with said employment relationship is due to the alleged inability to register the Claimant with the Football Association of Country D. In particular, the DRC judge noted that, on 26 July 2017, the Respondent informed the Claimant that it would not be executing the contractual relationship due to alleged impossibility to register the Claimant in accordance with the regulations of the Football Association of Country D.

16. In this regard, the DRC judge recalled the jurisprudence of the DRC, in accordance with which the validity of an employment contract cannot be made conditional upon the execution of (administrative) formalities, such as, but not limited to, the registration procedure in connection with the international transfer of a player, which is the sole responsibility of a club and on which a player has no influence. As regards the matter at stake, the Respondent alleged that it was unable to proceed to register the Claimant before the Football Association of Country D. For these reasons and whilst emphasizing once more that it is the responsibility of a club to register a player’s contract with its national association, the DRC judge decided to reject the Respondent’s arguments in this regard.

17. In view of the above, the DRC judge determined that the Respondent terminated the contract without just cause on 26 July 2017, when it informed the Claimant that it would not pursue the employment relationship. As a consequence, the DRC judge determined that the Claimant is entitled to compensation.

18. In continuation, the DRC judge outlined that 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 Claimant 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.

19. In view of the above, the DRC judge held that he first of all had to clarify whether the pertinent employment contract contained any clause, by means of which the parties had beforehand agreed upon a compensation payable by the contractual parties in the event of breach of contract. In this regard, the DRC judge observed that no such clause was agreed between the parties in this regard.

20. As a consequence, the DRC judge determined that the amount of compensation payable by the Respondent to the Claimant had to be assessed in application of the other parameters set out in art. 17 par. 1 of the Regulations. The DRC judge recalled that said provision provides for a non-exhaustive enumeration of criteria to be taken into consideration when calculating the amount of compensation payable. Therefore, other objective criteria may be taken into account at the discretion of the deciding body.

21. Bearing in mind the foregoing as well as the claim of the Claimant, the DRC judge proceeded with the calculation of the monies payable to the Claimant under the terms of the employment contract until November 2017 (i.e. the original date of expiration of the contract). In this regard, the DRC judge observed, as detailed above, that following the contents of the “Letter of Offer”, the Claimant would have earned the amount of 350,000,000 “including expenses needed for return tickets from city in Country B to Country D.”

22. Within this context, the DRC judge noted the Respondent’s allegation, according to which the basis for a hypothetically payable compensation would correspond to 280,000,000 (before mitigation) since, in its view, the work permit (35,000,000) and the agent’s commission (35,000,000) do not form part of the remuneration of the player. The DRC judge further noted that, according to the Respondent, the amount requested by the Claimant for the air tickets was already included in the letter of offer.

23. In this regard, and after examining the wording used in the contract, the DRC judge understood that the entire remuneration payable to the Claimant would correspond to 350,000,000. In particular, the DRC judge understood that the amounts usable for the “work permit” and the “agent’s commission”, as drafted in the contract, are only a guideline on how the Claimant should further redistribute part of his remuneration, but they do not constitute amounts that the Respondent could validly withhold from the Claimant’s remuneration. In particular, the DRC judge understood that the wording used by the parties in the contract, i.e. “we offer you a 4-month contract from July until November 2017 in which the total amount is 350.000.000 including expenses” (emphasis added) is clear.

24. Consequently, the DRC judge concluded that the amount of 350,000,000 serves as the basis for the determination of the amount of compensation for breach of contract.

25. In continuation, the DRC judge verified as to whether the Claimant 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 Claimant’s general obligation to mitigate his damages.

26. In this regard, the DRC judge remarked that the Claimant informed FIFA that he did not conclude any new employment contract with any other club after the termination of the contract by the Respondent and that he only played at an amateur level with the club from Country B, Club E.

27. As a result, the DRC judge established that the amount due by the Respondent as compensation corresponds to 350,000,000.

28. In conclusion, for all the above reasons, the DRC judge decided to partially accept the Claimant’s request and that the Respondent must pay to the Claimant the amount of 350,000,000 as compensation for breach of contract without just cause, which is considered by the DRC judge to be a reasonable and justified amount as compensation.

29. In addition, taking into account the Claimant’s request as well his constant practice, the DRC judge decided that the Respondent must pay to the Claimant interest of 5% p.a. on the compensation as of from the date of the claim.

30. Moreover, as regards the Claimant’s claim pertaining to air tickets, the DRC judge observed once again that the contract clearly stipulated that its total value amounts to 350,000,000 including expenses, and that among said expenses, the air tickets were already included within the aforementioned amount. Thus, the DRC judge decided to reject the Claimant’s request in this regard.

31. Furthermore, the DRC judge rejected any claim for legal expenses and procedural compensation in accordance with art. 18 par. 4 of the Procedural Rules and the respective longstanding jurisprudence of the DRC in this regard.

32. Finally, the DRC judge concluded his deliberations by rejecting any further claim lodged by the parties.

III. Decision of the DRC judge

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

2. The Respondent, Club C, has to pay to the Claimant, within 30 days as from the date of notification of this decision, compensation for breach of contract without just cause in the amount of 350,000,000, plus 5% interest p.a. as from 26 September 2017 until the date of effective payment.

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

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 DRC judge 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 (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 DRC judge:

Omar Ongaro

Football Regulatory Director

Enclosed: CAS directives