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 21 September 2017

Decision of the

Dispute Resolution Chamber

passed in Zurich, Switzerland, on 21 September 2017,

in the following composition:

Thomas Grimm (Switzerland), Deputy Chairman

John Bramhall (England), member

Johan van Gaalen (South Africa), member

Pavel Pivovarov (Russia), member

Mohamed Al-Saikhan (Saudi Arabia), member

on the claim presented by the player,

Player A, Country B

as Claimant

against the club,

Club C, Country D

as Respondent

regarding an employment-related dispute arisen between the parties

I. Facts of the case

1. On 19 August 2010, the player from country B, Player A (hereinafter: the Claimant) lodged a claim before FIFA against the club from country D, Club C (hereinafter: the Respondent) for breach of contract, claiming outstanding remuneration and compensation, based on contracts concluded with the Respondent and Company Z (hereinafter: the company).

2. This claim remained unanswered by the Respondent and, on 6 November 2014, the Dispute Resolution Chamber (DRC) decided that the Respondent was liable for breach of contract and that, therefore, the Respondent should pay to the Claimant outstanding remuneration and compensation for breach of contract.

3. Moreover, the DRC considered that the claim of the Claimant based on the service contract (cf. number I./24. below) did not fall under the competence of the DRC and that, thus, the part of the claim based on the service contract was considered inadmissible.

4. The DRC decision was appealed to the Court of Arbitration for Sport (CAS) by the Respondent only.

5. On 4 July 2016, the CAS rendered an award setting aside the decision of the DRC and deciding inter alia the following:

“The Dispute Resolution Chamber of the Fédération Internationale de Football Association was competent to adjudicate and decide the matter at hand.

The decision issued on 6 November 2014 by the Dispute Resolution Chamber of the Fédération Internationale de Football Association is set aside.

The legal proceedings related to the claim filed by the [Claimant] against the [Respondent] are referred back to the FIFA DRC for review, observing the due process of law.”

6. In the relevant award, the CAS established that the scope of the appeal proceedings was limited considering the Respondent’s requests and specifications during the hearing not to enter into the merits of the case. In particular, the CAS established the following:

“(…), both parties devoted substantial parts of their submissions to the merits of the case. Therefore, the Panel found it important to clarify specifically whether its interpretation was correct that, even if it were to find that the FIFA DRC was competent to adjudicate the matter at hand, it would nevertheless be prevented from entering into the merits as the Club explicitly requested that in such case the Panel was asked to decide “that the Appealed decision is upheld”.

As a consequence of the inquiry of the Panel in this respect, the representatives of the [Claimant] and the [Respondent] confirmed their agreement to such interpretation and to the limited scope of these proceedings as defined by the [Respondent] in its prayers for relief at the hearing”.

7. Regarding the competence of the DRC to decide on the present matter, the CAS determined inter alia the following:

- “(…) based on article 22(b) of the FIFA Regulations, the only possible exception would be when the parties have agreed to refer their disputes to a national arbitration tribunal established by a national federation. Since CAS is no such national arbitration tribunal, the Panel finds that the precondition for this exception is not applicable and that the FIFA DRC, based on the FIFA Regulations, rightfully accepted jurisdiction.”

- “although the [contractual extension – cf. number I./22. and following below] referred to the arbitration clause in favour of CAS as set out in the [private contract – cf. number I./16. and following below], the dispute at stake relates only to the [Claimant] and the [Respondent]. The Panel finds that any disputes between the [Claimant] and the [Respondent] had to be resolved in accordance with the FIFA Regulations, and therefore had to be adjudicated in the first instance by the FIFA DRC”.

8. The Respondent appealed the CAS award to the Swiss Federal Tribunal.

9. On 7 February 2017, the Swiss Federal Tribunal rejected the appeal and confirmed the CAS award.

10. Following the CAS award, the proceedings before the DRC were reopened and, considering that the DRC’s competence was already established by the CAS, the Respondent was invited to submit its position as to the substance of the matter only.

Facts as to the substance of the case:

11. On 28 August 2008, the Claimant and the Respondent signed a document titled “THE CONTRACT on performance of professional duties by non-amateur-Football player of Club C” (hereinafter: the first standard contract), valid until 28 August 2009.

12. The first standard contract establishes as “Subject of the Contract” that “The [Respondent] undertakes to employ the [Claimant] as a professional football player (non-amateur football player) of soccer team Club C, to pay wages and to provide with the working conditions necessary for performance of such work and stipulated by the legislation of Country D, and the [Claimant] undertakes to perform work as the football player of [Respondent], using thus all professional skills with the purpose of achievement by [Respondent] high sports results”.

13. Article 4.1 of the first standard contract establishes that “for performance of the duties stipulated by the present contract, the wages, according to the list of staff of [Respondent] are monthly paid to the [Claimant]”.

14. Article 5.4 of the first standard contract establishes that “In case [Claimant] without valid excuse will refuse performance of the present contract or the contract will be terminated under the initiative of [Respondent] because of [Claimant]’s fault, [Claimant] pays to the [Respondent] monetary indemnification at a rate of three-monthly income”.

15. In accordance with article 7.1 of the first standard contract, ”All disputes and disagreements which may arise during performance of obligations under the present contract, coordinate the parties by negotiations. The parties are obliged to abstain from the decision of disputes among themselves in courts of the general jurisdiction, for this purpose it is necessary to use the appropriate bodies of Professional football league of Country D, Football Federation from Country D, FIFA and the Court of Arbitration for Sport”.

16. On the same date, 28 August 2008, the Claimant, the Respondent and the company signed a document titled “Employment contract of the athlete Player A” (hereinafter: the private contract) valid from the date of signature until 28 August 2009 or “at the end of the sports season 2008/2009, whichever of the two occurs later”.

17. The private contract establishes the following in its “Preamble”:

- “the [Respondent] wishes to employ the Athlete to act in its Professional Team, for one sportive season, from 28, August, 2008 to August 28, 2009 in accordance with the terms and conditions of this Contract”;

- “the company acting as an owner of [Respondent] hereby agrees to make payments under this contract”:

- “It is agreed that The Preambles constitute an integral part of this contract”.

18. According to article 2.1 of the private contract, the company shall pay the Claimant a basic salary of EUR 6,500,000 plus EUR 1,000,000 regarding “the transferring compensation of the athlete”, payable in instalments as follows:

- EUR 3,500,000 “free taxes”, due on the signing date;

- EUR 2,000,000 “free taxes”, due on 25 September 2008;

- EUR 2,000,000 “free taxes”, due on 25 October 2008.

19. Article 3.1 of the private contract establishes that “During the entire duration of this Contract between the Athlete, Company and the [Respondent], the Athlete is entitled to”:

- 3.1.1 “Bonus per match: in accordance with the Regulation of Club C”.

- 3.1.2 fringe benefits such as flight tickets, furnished house, hotel costs, school fees for his children.

20. Article 4 of the private contract establishes a possibility to extend the contract for one or two seasons, in which case the Claimant would be entitled to a remuneration of EUR 6,000,000. In case the parties agree on an extension, “the Parties shall agree in writing by no later than 30 April 2009”.

21. Article 5 of the private contract establishes that

- 5.1 “Any dispute arising from or related to the present contract will be submitted exclusively to an arbitration procedure before the Court of Arbitration for Sport (TAS-CAS) in Lausanne, Switzerland, and resolved definitively in accordance with the Code-of sports-related arbitration”.

- 5.2 “The Panel will consist of three arbitrators and the language of the arbitration will be English. The final award shall be unappealable and fully enforceable by and between the Parties before the FIFA Competent Committee, which decision shall be considered as final and binding”.

- 5.3 “This contract, its interpretation and any disputes arising thereof shall be governed by and construed in accordance with the Laws of Country D and to the FIFA Regulations and in case of conflict of laws, the FIFA Regulations shall prevail”.

22. On 17 November 2008, the Claimant, the Respondent, which is referred to as “Employer” in this document, and the company signed a document titled “Term of Employment Contract Extension” (hereinafter: the contractual extension), by means of which the parties extended “the state period of validity of related contract” until 31 December 2011, in accordance with article 4 of the private contract dated 28 August 2008, establishing the remuneration for the seasons 2010 and 2011, in its articles 2.a) and 2.b), as follows:

Season 2010

- The Respondent (“Employer”) will pay the Claimant the amount of EUR 6,000,000 divided in two equal instalments on 25 August 2009 and 25 September 2009;

Season 2011

- The Respondent (“Employer”) will pay the Claimant the amount of EUR 6,000,000 divided in two equal instalments on 25 August 2010 and 25 September 2010.

23. Article 3 of the contractual extension establishes that “to be continue being valid for the contractual however extending period, all the rest clauses of the Employment contract firmed between [Respondent] and [Claimant] in 28 August 2008 and that they had not damaged no modification with the present instrument from Extension”.

24. On 1 April 2009, the Claimant, the Respondent and the company signed a document named “Service Contract” valid until 31 December 2011, by means of which the Claimant was hired as “Consultant to advise the [Respondent] on the assembly’s football team, the Technical Commission, modernizing the management of soccer, identification of talents, acting, even when prompted, the recruitment of players, comment on financial terms for the loan and pay athlete in search quality technical and professional athletes to be engaged in training and creation of conditions for training and preparation for the athletes to think in terms of training to be established, and represent the [Respondent] in all countries and clubs to football that is requested to be present in that capacity”.

25. According to said “Service Contract” the Claimant was entitled to “26% the importance equal amount from his salary established in the contract of employment signed on 28 August 2008 and the term of option signed on 17 November 2008, this amounts to be paid on the same dates of those contracts”.

26. Article 5.1 of the “Service Contract” establishes that “The [Respondent] may use the image of the [Claimant] for the disclosure of his, with, and therefore warn you in advance of at least fifteen days where the event to be held depends on the physical presence of the [Claimant]”.

27. Moreover, the “Service Contract” establishes that “The company signing this Agreement as a responsible [Respondent] solidarity with the obligations assumed by it with the player in this instrument”.

28. On 20 January 2010, the Claimant and the Respondent signed another document titled “THE CONTRACT on performance of professional duties by non-amateur-Football player of Club C” (hereinafter: the second standard contract), valid from 6 January 2010 until 31 December 2010, which contents are the same as the first standard contract.

29. On 9 August 2010, the Claimant terminated the contractual relationship in writing alleging just cause. In his notice of termination, the Claimant referred to his correspondence, allegedly addressed to the Respondent and the company on 26 July 2010, as well as to the correspondence dated 7 August 2010 sent to the President of the Respondent, which both allegedly remained unanswered.

30. On 11 August 2010, the Claimant initiated a debt collection request against the company before the Debt Collection Office of Baar, Switzerland.

31. On 13 August 2010, the company was declared bankrupt.

32. On 19 August 2010, with a subsequent amendment in his replica on 20 June 2017, the Claimant lodged a claim before FIFA against the Respondent for breach of contract.

33. On 17 April 2011, the Claimant filed a claim against the company before the Bankruptcy office in Zug, Switzerland, claiming a total amount of CHF 22,659,806 regarding wages and requested collocation of such amounts as a first class claim.

34. In his claim lodged against the Respondent before FIFA on 19 August 2010, the Claimant asked to be awarded the following monies:

Outstanding remuneration:

EUR 6,000,000 on the basis of the contractual extension:

EUR 361,772.94 according to art. 3.1.2 of the private contract;

EUR 1,847,240 on the basis of the service agreement.

Compensation:

EUR 7,650,000 on the basis of the contractual extension and the service contract.

35. In the amended claim submitted in his replica on 20 June 2017, the Claimant requested the following :

- Outstanding remuneration:

EUR 6,000,000 on the basis of the contractual extension, plus 5% interest p.a. on EUR 3,000,000 as from 25 August 2009 and 5% interest p.a. on EUR 3,000,000 as of 25 September 2009;

- Compensation for breach of contract:

EUR 5,683,674.30 taking into account the residual value of the contractual extension and his income with a new club, plus 5% interest p.a. as from 9 August 2010; and

- that sporting sanctions be imposed on the Respondent.

36. According to the Claimant, the Respondent and the Claimant concluded an employment contract on 28 August 2008, i.e. the private contract, which established the possibility of extending the contractual period. Subsequently, the Respondent and the Claimant signed the contractual extension establishing a new contractual period until 31 December 2011 and determining the remuneration for the seasons 2010 and 2011.

37. According to the Claimant, the Respondent failed to pay the instalments that fell due on 25 August 2009 and 25 September 2009 in the amount of EUR 3,000,000 each in accordance with the contractual extension. In particular, regarding some of the payments he did receive, the Claimant submitted copies of the following receipts of money transfers made by the company to the Claimant:

- EUR 3,500,000, dated 4 September 2008;

- EUR 1,333,350, dated 21 October 2008;

- EUR 1,000,000, dated 19 February 2009;

- EUR 35,000, dated 19 February 2009.

38. The Claimant stated having held several meetings with the Respondent to try to solve the situation, without success. As a consequence, the Claimant held that he contacted the Respondent on 26 July 2010, requesting the payment of the outstanding remuneration of EUR 6,000,000 within 10 days. In this respect, the Claimant submitted a copy of an undated default notice addressed to the Respondent and the company, requesting the payment of the amounts due on 25 August 2009 and on 25 September 2009. Since no payment was received, the Claimant terminated the contract, on 9 August 2010, invoking just cause considering that his remuneration for the entire 2010 season had been outstanding for almost a year.

39. Moreover, the Claimant stated that, before terminating the contract, he also contacted the company in order to receive the relevant amounts, since the company also signed the relevant contracts and was the owner of the Respondent.

40. Therefore, according to the Claimant, on the date of the claim, the amount of EUR 6,000,000 was outstanding as per the contractual extension.

41. The Claimant informed FIFA that he remained unemployed as from 9 August 2010 until 27 January 2011, on which date he signed an employment contract with the club from country B, Club E, valid from 27 January 2011 until 31 December 2011. This employment contract establishes a monthly salary of 70,000 in the currency of Country B.

42. Although, following the CAS award, the Respondent was invited to submit its position as to the substance of the matter only, in light of the relevant CAS award and the subsequent confirmation of such award by the Swiss Federal Tribunal, the Respondent held in its reply that the DRC is not competent to hear the present matter and submitted several arguments challenging the competence of the Dispute Resolution Chamber to decide on the present matter.

43. In this respect, the Respondent held that the CAS award and the judgement of the Swiss Federal Tribunal are not applicable as to the DRC’s jurisdiction in the present matter, because both are based on incomplete facts, since the Respondent was not involved in the first invalidated proceedings and the proceedings were not based on the important factual evidence which was now presented.

44. According to the Respondent, the scope of review of the CAS and the Swiss Federal Tribunal as appellate bodies was too narrow and they were deprived of the benefit to consider the new evidence presented only at this stage.

45. Moreover, the Respondent affirmed that based on the standard contracts of 2008 and 2010, the appropriate bodies of the Professional Football League of Country D would be competent, rather than the DRC. On the other hand, even if the Claimant had a valid claim regarding the payments established in the private contract and the contractual extension and the Respondent were actually responsible for any payment, the CAS would have exclusive jurisdiction.

46. The Respondent stated that the DRC is not an arbitration body but rather a body of an association as confirmed by the CAS and the Swiss federal Tribunal and for this reason, any decision passed would not serve as a decision enforceable pursuant to the New York convention on the Recognition and Enforcement of Foreign Arbitral Awards. Moreover, the clear intent of the parties was to submit any dispute to the CAS.

47. In this respect, the Respondent explained that the company was a party to these contracts and there was no employment relationship between the company and the Respondent and the company was not part of the "FIFA family". Therefore, according to the Respondent, it was the intention of the parties to establish the jurisdiction of the CAS.

48. In particular, the Respondent held that (i) the Respondent was not a party to the contractual extension, (ii) it had no payment obligations to the player and (iii) that the FIFA Regulations were not applicable.

49. Moreover, according to the Respondent, since it was no party to the private contract and the contractual extension, the present dispute is between the Claimant and the company, to which the FIFA Regulations cannot apply, and they certainly cannot derogate from the arbitration clause agreed between the parties. Therefore, considering that the private contract and the contractual extension clearly provide for jurisdiction of the CAS triggering the ordinary arbitration proceedings in accordance with the CAS Code, the agreement of the parties is valid and binding on the parties.

50. In addition, the Respondent affirmed that the claim is time-barred according to the law of Country D, considering that the claim lodged before FIFA does neither interrupt nor suspend the statute of limitations. The Respondent held that the claim is also time-barred according to Swiss law, since the DRC is neither an ordinary court nor an arbitration tribunal.

51. The Respondent explained that the company was the principal shareholder in “Company X”, which for its part was the Respondent's principal shareholder. Moreover, the Respondent added that the company was also the Respondent’s sponsor “at all relevant times”. In this respect, the Respondent provided a witness statement from its Vice-President and the General Director of the Respondent as well as several invoices issued by a hotel in Barcelona to “Company Z”.

52. Furthermore, according to the Respondent, foreign players have a different labour status than national players and need to obtain a license to work from the Agency of Foreign Labor Migration Affairs of Country D. In order to acquire such license, the Respondent has to submit an employment contract concluded between the Respondent and the foreign player.

53. According to the Respondent, the general proceeding was that the company requested the Respondent to accept a foreign player in the team, following which the Respondent signed an employment contract with the player and registered him with the Football Federation of Country D. The player would then play for the Respondent and receive a salary in accordance with the relevant employment contract. In this respect, the Respondent affirmed that it was never involved in further payments to foreign players as well as that all negotiations were handled by the company directly with the player.

54. Moreover, allegedly due to statutory currency restrictions in Country D, the Respondent was not entitled to make foreign-exchange transactions to the benefit of its football players. Therefore, the company, domiciled outside Country D, made all the foreign-exchange transactions, since the restrictions under the law of Country Ds were not applicable to the company.

55. The Respondent stated having paid the wages established in the first and second standard contracts in national currency, which are shown in the Respondent’s monthly wages lists. According to the Respondent, these lists also demonstrate that the Claimant acknowledged receipt of the relevant payments by signing the lists. In this regard, the Respondent provided several payroll lists for the relevant period, containing the signature of players, including the Claimant, related to amounts paid in Currency of Country D.

56. Therefore, the Respondent held that any payments of salaries other than what was established in the standard contracts would be arranged for and paid by the company. In particular, the Respondent held that the company paid the Claimant in total EUR 11,010,053 between 29 August 2008 and 10 December 2009. In support of its argument, the Respondent presented copies of 18 receipts of transfers of different amounts adding up to EUR 11,010,053 made by the company to the Claimant.

57. In addition, the Respondent insisted that the payments established in the private contract were in Euro and thus, should have been made exclusively by the company. For the same reason, the payments established in the contractual extension should also be made by the company. In this respect, the Respondent provided a legal opinion in the sense that the private contract is actually a “civil-law sponsorship agreement” in which the company accepted the obligation to pay the Claimant in foreign currency. The Respondent further held that the Respondent did not become a party by means of the contractual extension.

58. The Respondent insists that it was not aware of any of the aforementioned payments, private contracts and further documentation, which it allegedly only had access to upon review of the company’s bankruptcy file.

59. According to the Respondent, the contractual extension was an initiative of the Claimant and the company and the Respondent was not aware of the extension. The document was allegedly drafted by the Claimant’s agent and translated by the Claimant’s wife, reason why the wording of the contractual extension and its translation into English creates uncertainty, rendering its wording unreliable.

60. The Respondent stated that only Mr I, who signed the contractual extension as the “Acting General Director of the club”, without having the legal capacity to do so, was aware of such proposal. In addition, Mr I did not speak Portuguese or English and was allegedly misled by the company. The Respondent never intended to sign the contractual extension or be a party to the private contract in the first place and the stakeholders of the Respondent did not approve the extension.

61. The Respondent further stated that, in accordance with Swiss law, the interpretation of the private contract and contractual extension shall take into account the respective wording, the contractual system, the purpose of the contracts and interest of the parties, the history of the contracts and the conduct of the parties after conclusion of the contracts. In particular, it has to be examined how the parties to the private contract and contractual extension understood the agreements and who was the actual party to such agreements and in which role.

62. In this context, the Respondent held that the burden of proof lies with the Claimant, since he is the party claiming on the basis of the private contract and contractual extension.

63. In this respect, the Respondent recalled that the contractual extension was carelessly drafted. According to the Respondent, the abbreviation Employer allegedly refers to the company and thus, the company shall pay the salary. Considering the difference between the versions of the contract in Portuguese and English, it is not clear who shall make the payments to the Claimant. Furthermore, the Respondent held that the company was the employer in the private contract and there is no reason why in the extension of the private contract the Respondent would become the employer.

64. Regarding the termination of the contractual relationship by the Claimant, the Respondent stated having never received any default notice from the Claimant before the termination. The Respondent alleged that the Claimant played the last game on 1 August 2010 after which he left Country D without informing the Respondent of his departure.

65. In this respect, the Respondent affirmed that all emails regarding negotiations and payments were exchanged between the Claimant and the company, which clearly demonstrates that the Respondent was not the debtor, and it submitted several emails exchanged between the Claimant and Mr K, allegedly the CEO of the company, in this respect.

66. In addition, the Respondent held that the Claimant contacted the company on 7, 8 and 9 August 2010 and not the Respondent. According to the Respondent, this demonstrates that the Claimant negotiated exclusively with the company and regarded the company as his debtor, even requesting a Debt Registry Extract regarding the company and also having initiated debt collection proceedings against it.

67. According to the Respondent, upon initiating debt proceedings against the company, in which he allegedly clearly requests the payment of the amounts claimed in the present matter, the Claimant clearly acknowledges that the payments under the private contract and the contractual extension were to be made by the company.

68. Moreover, the Respondent affirmed that, after the company was declared bankrupt, the Claimant submitted claims to the Bankruptcy Office, and requested the collocation of his claim based on his employment relationship with the company in the first class, submitting a copy of the private contract and the contractual extension.

69. Therefore, the Respondent requested that, in case the DRC would consider that the Respondent was party to the private contract and contractual extension and had to make payments to the Claimant, the DRC shall consider that the Claimant waived his right to claim against the Respondent, due to his legal and other actions brought solely against the company.

70. The Respondent affirmed that the Claimant only lodged the claim against the Respondent before FIFA after the opening of the bankruptcy proceedings against the company for amounts already included in his debt enforcement, since he was concerned that the company would not be able to make the relevant payments.

71. According to the Respondent, in any case, the amount of compensation claimed must be reduced because the Claimant did not do all in his power to reduce damages or avoid it altogether, having remained unemployed between 9 August 2010 and 27 January 2011.

72. Additionally, according to the Respondent, the amount of compensation due, if any, must be reduced to the extent to which the Claimant would be satisfied from the company’s liquidator. Qualifying as an employee, the Claimant will benefit from the classification of his claims submitted in the bankruptcy proceedings relating to the company as first class claims according to the applicable law. According to the Respondent, this is very likely to lead to the full or almost full satisfaction of his submitted claims.

73. Finally, the Respondent held that the procedural and legal costs incurred by the Respondent as a result of the claim should be imposed on the Claimant.

74. In his replica, the Claimant held that the arguments raised by the Respondent as to the competence of the DRC should not be considered, since the CAS had already decided in this respect. In any case, the Claimant insisted on the competence of the DRC to decide on the present matter, stating that article 7.1 of the standard contracts establish the competence of FIFA. Moreover, the Claimant recalled the argument of the CAS in the sense that “the Panel would like to emphasise again that the dispute between the parties deals only with the payments under the [contractual extension] and, indeed under this contract only the [Respondent] (the “Employer”) was responsible for the payments to the [Claimant]”.

75. In continuation, the Claimant stated that the Respondent is trying to make the case more complex than it actually is. In particular, the Claimant explained that on 28 August 2008, the Claimant and the Respondent entered into an employment relationship, concluding two employment contracts, a standard employment contract and a private employment contract. The standard contract contained standardized clauses regarding the main terms and conditions, except for a remuneration. On the other hand, the private contract had as main objective to set out the remuneration due by the Respondent to the Claimant.

76. Subsequently, on 17 November 2008, the parties decided to extend the private contract, concluding the contractual extension and amending some clauses of the private contract and, on 6 January 2010, the Claimant and the Respondent concluded another standard employment contract with the same terms and conditions as the first standard employment contract, without establishing any remuneration.

77. The Respondent failed to pay the first two instalments of the contractual extension, reason why the Claimant put the Respondent in default and afterwards terminated the contractual relationship with the Respondent.

78. Regarding the governing law, the Claimant held that the Respondent failed to demonstrate that the law of Country D should apply and that there is a reason to deviate from FIFA Regulations and Swiss law. Moreover, he stated that the parties agreed on the application of the FIFA Regulations.

79. In continuation, the Claimant insisted on his claim, making references to several arguments raised in the CAS award, in particular to the fact that only the Respondent was responsible to pay the Claimant the remuneration for his services as player, according to the contractual extension.

80. Moreover, the Claimant emphasised that the burden of proof regarding the payment of the remuneration established in the contractual extension lies on the Respondent and that it failed to present such proof.

81. The Claimant added that considering the amount outstanding at the moment of termination, he clearly had just cause to terminate the contract. As a consequence, since the Claimant terminated the contract with just cause due to non-payment of the contractual remuneration, the Respondent would have to demonstrate otherwise. However, the Respondent has not provided any documentary evidence that would justify why the DRC should take a different decision.

82. The Claimant also affirmed that the non-registration of private contracts with the relevant Association do not render such agreements invalid.

83. Moreover, the Claimant held that the private contract clearly establishes that the Respondent employs the Claimant to act in its professional team as well as that the company is acting as an owner of the Respondent. Finally, all contracts were duly signed and stamped by the Respondent.

84. In addition, the Claimant stated that the company’s participation was secondary only to comply with the payments on behalf of the Respondent, but does not relieve the Respondent from being the primary debtor. The Claimant further deemed that it does not make any sense that he would have to continue to play for the Respondent without receiving his remuneration.

85. The Claimant made reference to Swiss law and stated that even if a third party is able to have payment obligations assigned to it, the primary obligor, i.e. the Respondent, will not be relieved of its liability to pay for amounts that remain unpaid by the third party, i.e. the company.

86. The Claimant also stated that by writing both to the company and the Respondent regarding the outstanding remuneration, the Claimant did not absolve the Respondent from its liability. However, considering that the company had been making payments to the Claimant on behalf of the Respondent, it was reasonable to follow-up on payments with the company. The Claimant added that the Respondent remained the employer and the primary debtor.

87. The Claimant further held that all agreements were drafted by the Respondent and the main negotiations were done with the Respondent and, thus, the Respondent cannot question the contents of the agreements signed raising mistakes in wording. By signing the contracts, it agreed to its terms and the company being a shareholder of the Respondent, ratified the authority of Mr I to sign on behalf of the Respondent.

88. The Respondent presented its final comments on the present matter, requesting that the company joins the present procedure as well as a hearing with all persons involved in the conclusion of the private contract and contractual extension.

89. The Respondent stated that the Claimant is distorting the facts in an attempt to find a new debtor, after having lost the real debtor, i.e. the company. The Respondent further held that the Claimant failed to discharge his burden of proof and did not submit any bank account statement to avoid demonstrating that all payments were received from the company.

90. The Respondent recalled that the company was not a shareholder of the Respondent, but a shareholder of “Company X”, which was the principal shareholder of the Respondent and, thus, the company was allegedly not in contact with the Respondent’s management.

91. The Respondent insisted on its arguments and, in particular, on the fact that it was not a party to the private contract and contractual extension and that it never paid any amount based on such agreements. Moreover, the Respondent held that the Claimant did not dispute most of the Respondent’s arguments, simply trying to mislead the decision-body.

92. In addition, the Respondent held that, upon the Claimant’s request, the company declared, between March and June 2009, that the funds received from the company were not salaries from the Respondent, but “subsidies in kind as a reward for games”. The Respondent provided different statements issued by the company. One of the statements declares that the Claimant “regularly receives grants in kind as a prize for games, as a contract of employment signed between him, Club C and Company Z in 28/08/2008, Clause 3 – Bonus and Benefits of the Contracted Office”. The Respondent explained that such declarations were disclosed in proceedings at a court in Country B involving the Claimant and the Club F.

93. The Respondent added that the person representing the company and signing the private contract and contractual extension faced criminal proceedings in Country D and that, thus, the Respondent cannot be held liable for such agreements.

94. The Respondent stated that it never, neither explicitly nor implicitly, expressed its intention to conclude a contract with the Claimant in which it would be bound as debtor of the Euro compensation of the Claimant as per the private contract.

95. Moreover, the Respondent held that, in case it would be considered that the Respondent is liable to pay any amount related to the private contract and the contractual extension, the submitted bank extracts demonstrate that the company paid the Claimant the aggregate amount of EUR 11,010,053, while the remuneration due under the private contract was EUR 7,500,000. Therefore, it can be assumed that the remaining EUR 3,510,053 have also been already paid by the company in the context of the contractual extension, since the private contract provided for no other payments, and the burden of proof lies on the Claimant.

96. The Respondent further raised new arguments, affirming that the Claimant is involved in proceedings in front of a court in Country B, by means of which the Club F lodged a claim against the Claimant for misappropriation of funds, involving the company. Therefore, the Respondent requested that the Claimant disclose his financial dealings with the company in full or that the company joins the present proceedings.

97. Furthermore, the Respondent stated that the fact that the Claimant chose to not disclose the facts above, undermines his credibility and shows that he had a close relationship with the company.

II. Considerations of the Dispute Resolution Chamber

1. First of all, 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 19 August 2010. Consequently, the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (edition 2008; hereinafter: 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 in combination with art. 22 lit. b) of the Regulations on the Status and Transfer of Players (edition 2016), the Dispute Resolution Chamber would, in principle, be competent to deal with the matter at stake, which concerns an employment-related dispute with an international dimension between a player from country B and an club from country D.

3. However, the members of the DRC took note that the Respondent had challenged the competence of the DRC to adjudicate the present matter, even though it had been invited to provide its position as to the substance of the present matter only.

4. At this point, the members of the DRC recalled that the present matter had already been decided upon by the Dispute Resolution Chamber on 6 November 2014 and that the Respondent lodged an appeal against said DRC decision in front of the CAS. In particular, the Chamber took note that, during the hearing at the CAS, the parties confirmed their agreement to limit the scope of the appeal to the issue of the competence of the DRC (cf. number I./6. above).

5. The Chamber further noted that, considering the description of the background facts in the relevant CAS award, the CAS Panel was informed of the bankruptcy proceedings involving the company and that the Claimant had submitted a claim against the company with the relevant bankruptcy office.

6. Furthermore, the Chamber took into account that the CAS decided to set aside the DRC decision adopted on 6 November 2014 as well as to refer the matter back to FIFA for review. In particular, the members of the DRC took note that the CAS, in the relevant award, established that the DRC is competent to decide on the present matter, stating inter alia that “any disputes between the [Claimant] and the [Respondent] had to be resolved in accordance with the FIFA Regulations, and therefore had to be adjudicated in the first instance by the FIFA DRC”.

7. Furthermore, the DRC acknowledged that the Respondent challenged the CAS award in front of the Swiss Federal Tribunal. On 7 February 2017, the Swiss Federal Tribunal confirmed the decision adopted by the CAS.

8. In this respect, the Chamber recalled that in light of art. 57 par. 1 and art. 58 par. 1 of the FIFA Statutes, the FIFA DRC is bound by the findings of CAS panels in appeal proceedings of decisions passed by the DRC. In casu, CAS clearly found, as mentioned above, that FIFA’s Dispute Resolution Chamber is competent to enter into the merits of the present matter.

9. Considering all the above, the members of the DRC unanimously concluded that, in light of the fact that the competence of the DRC to deal with the present matter was already determined by the CAS in the aforementioned appeal proceedings, it was not necessary to proceed with an analysis and discussion on the issue of the competence of the DRC to deal with the present matter.

10. Therefore, the DRC concluded that, as already established by the CAS, the DRC is competent to decide on the employment-related dispute between the Claimant and the Respondent in accordance with art. 22 lit. b) of the Regulations on the Status and Transfer of Players.

11. In continuation, the Chamber reverted to the argument of the Respondent, according to whom the present matter is barred by the statute of limitations on the basis of the law of Country D and Swiss law. In this regard, the members of the Chamber referred to art. 25 par. 5 of the aforementioned Regulations, according to which, inter alia, the Dispute Resolution Chamber shall not hear any case subject to the said Regulations if more than two years have elapsed since the event giving rise to the dispute. The present claim having been lodged in front of the DRC on 19 August 2010 and the event giving rise to the dispute having occurred on 9 August 2010, the members of the Chamber had to reject the respective argument of the Respondent and confirmed that the present petition was lodged in front of the DRC within said two years’ period of time and is, thus, not barred by the statute of limitations in accordance with art. 25 par. 5 of the aforementioned Regulations.

12. Having said that, 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 par. 2 of the Regulations on the Status and Transfer of Players (edition 2016) and considering that the present claim was lodged on 19 August 2010, the 2009 edition of the Regulations on the Status and Transfer of Players (hereinafter: Regulations) is applicable to the matter at hand as to the substance.

13. 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 above-mentioned facts as well as the arguments and the documentation submitted by the parties. However, the Chamber 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.

14. At this point, the Chamber wished to emphasise that, in line with the decision passed by the DRC on 6 November 2014, the service contract is not strictly employment-related within the framework of a player and club relationship and therefore, does not fall under the competence of the DRC and that, consequently, any amount claimed on the basis of the service contract cannot be considered.

15. In continuation, the members of the Chamber noted that the Claimant lodged a claim against the Respondent for breach of contract requesting outstanding remuneration and compensation for breach of contract.

16. In this respect, the Chamber first of all acknowledged that the Claimant terminated the relevant contract on 9 August 2010 in writing, invoking just cause.

17. The DRC took note that the Claimant held that although he was entitled to receive the total amount of EUR 6,000,000 in two instalments, which fell due on 25 August 2009 and 25 September 2009 on the basis of the contractual extension, in spite of his default notice, he had not received any such payments from the Respondent at the moment when he terminated the contract.

18. On the other hand, the Chamber noted that the Respondent rejected the Claimant’s claim arguing inter alia that it was not legally bound by the private contract and the contractual extension.

19. In this respect, the DRC took note that the Respondent alleged not having been aware of the private contract and the contractual extension until it had access to the company’s bankruptcy file. In particular, the Respondent held that it was not a party to the private contract and the contractual extension invoking various arguments, one of which being that these contracts were allegedly signed by an unauthorized person on behalf of the Respondent.

20. Moreover, the Chamber took note that the Respondent held that it made payments to the Claimant on the basis of the first and second standard contracts only as well as that it could not assume financial obligations in EUR, alleging that payments in a foreign currency are forbidden under the law of Country D.

21. Additionally, the Chamber noted the Respondent’s argument that the Claimant was aware that the company was the party liable to pay his remuneration and even considered the company to be the debtor, in light of the correspondence he exchanged with the company claiming payment of the remuneration established in the private contract and contractual extension from the company and the debt enforcement proceedings he initiated against the company.

22. At this point, the Chamber reverted to the Respondent’s request for the company to be involved as a party in the present matter. In this respect, the DRC referred to the contents of art. 6 par. 1 of the Procedural Rules and rejected the Respondent’s request, considering that a company is not a member of FIFA and thus, cannot be a party in the present matter.

23. Subsequently, the DRC acknowledged that the Claimant, for his part, insisted on his claim, stating, inter alia, that the Respondent is the employer and thus, the party responsible for payment of his remuneration and that the Respondent had signed all the contracts.

24. In this respect, the members of the DRC were eager to state that the Respondent’s argumentation that it was not bound to the private contract and the contractual extension because they were signed on behalf of the Respondent by a non-authorized person cannot be upheld. Indeed, the DRC pointed out that, in accordance with the principle of good faith, to be respected by the parties during the conclusion of contracts, the Claimant could reasonably believe, in good faith, that the person signing the relevant agreements on behalf of the Respondent was legally authorized to sign them. Equally and in accordance with the principle of burden of proof, as set out in art. 12 par. 3 of the Procedural Rules, the DRC outlined that the Respondent did not provide documentary evidence demonstrating that the Claimant was or could have been aware of the alleged situation outlined by the Respondent at the moment of signing the pertinent contracts. In this context, the members of the DRC further highlighted that the signatures on the relevant contracts are accompanied by the Respondent’s stamp.

25. In continuation, the DRC concluded that the arguments raised by the Respondent regarding foreign currency restrictions and that it was not aware of the private contract and the contractual extension could not be upheld, considering that the Respondent duly signed and stamped both contracts, thereby accepting their contractual terms.

26. On account of these considerations, the members of the Chamber concurred that the arguments put forward by the Respondent with respect to its allegation that it is not legally bound to the private contract and the contractual extension must be rejected.

27. Having established the above, the members of the DRC recalled that the claim of the Claimant is mainly based on the contractual extension as well as that the first and second standard contracts do not specify any remuneration payable to the Claimant for his services, whereas they do establish, inter alia, that the Respondent employs the Claimant as a player.

28. In this respect and considering the arguments of the Claimant and the Respondent, the DRC analysed the contents of the contractual extension in greater detail so as to determine the party responsible for paying the Claimant’s remuneration.

29. In this respect, the Chamber recalled that the contractual extension clearly defines the Respondent as the “Employer” and clearly establishes that the “Employer” was responsible to pay the Claimant’s remuneration.

30. For the sake of completeness, bearing in mind that the employment contract signed between the Claimant and the Respondent on 28 August 2008 which is mentioned in art. 3 of the contractual extension has not further been specified in said art. 3, the Chamber emphasised that in accordance with the private contract signed on 28 August 2008, the Respondent is referred to as the employer of the Claimant and the company as the owner of the Respondent. In addition, according to the first standard contract concluded on 28 August 2008 the Respondent “undertakes to employ the [Claimant] as a professional football player (non-amateur football player) of soccer team Club C, to pay wages and to provide with the working conditions necessary for performance of such work and stipulated by the legislation of Country D, and the [Claimant] undertakes to perform work as the football player of [Respondent], using thus all professional skills with the purpose of achievement by [Respondent] high sports results”.

31. Having taken note of the various employment-related contracts concluded by and between the Claimant and the Respondent as well as by and between the Claimant, the Respondent and the company, the members of the Chamber established that the Claimant and the Respondent entered into an employment relationship and that the Claimant would render his services to the Respondent only. In other words, there is no reciprocal exchange of obligations between the Claimant and the company and it is, therefore, unquestionable that the Claimant carried out his services as a player on behalf of the Respondent and not on behalf of the company. What is more, the private contract clearly refers to the company as the owner of the Respondent and, therefore, there is a clear link between the company and the Respondent. It thus appears that the company was merely included as a third party in the relevant contracts as a payment instrument.

32. On account of the above considerations, the members of the DRC decided to reject the arguments put forward by the Respondent and established that the Respondent is the party responsible to pay the Claimant his remuneration established in, inter alia, the contractual extension.

33. Having established the above, the Chamber recalled that the Claimant and the Respondent signed the contractual extension on 17 November 2008 extending employment relationship until 31 December 2011. In particular, the DRC acknowledged that the contractual extension established that the Claimant was entitled to receive the amount of EUR 6,000,000 for each of the seasons 2010 and 2011, to be paid in two equal instalments of EUR 3,000,000, due on 25 August and 25 September 2009, for the season 2010, and on 25 August and 25 September 2010, for the season 2011.

34. In addition, the DRC recalled that the Claimant terminated the relevant contract on 9 August 2010 alleging that the aggregate amount of EUR 6,000,000, corresponding to the two instalments of EUR 3,000,000 each due for the 2010 season, which fell due on 25 August and 25 September 2009, respectively, was still outstanding in spite of having put the Respondent in default.

35. In this respect, the Chamber took note that the Respondent, for its part, held that the monies paid to the Claimant by the company should be taken into account. In particular, the Respondent held that the Claimant had received remuneration in the total amount of EUR 11,010,053 between 29 August 2008 and 10 December 2009, providing several receipts of money transfers totalling said amount.

36. Furthermore, the DRC took note that the Claimant had not contested having received the relevant money transfers from the company.

37. In this context, the DRC took into account that in accordance with the private contract, which was valid as from 28 August 2008 until 28 August 2009, the Claimant was entitled to receive a total remuneration of EUR 7,500,000 and that the Respondent demonstrated having remitted the amount of EUR 11,010,053 to the Claimant between 29 August 2008 and 10 December 2009. Consequently, the members of the DRC considered that the difference of EUR 3,510,053 corresponds to the remuneration that fell due in accordance with the contractual extension, of which the first instalment in the amount of EUR 3,000,000 fell due on 25 August 2009.

38. On account of the aforementioned, the Chamber established that the Respondent, without any valid reason, failed to remit to the Claimant a big portion of the instalment due on 25 September 2009, i.e. the amount of EUR 2,489,947, and that this amount was still outstanding on 9 August 2010 when the Claimant terminated the relevant contract. Therefore, the Chamber concurred that the Respondent had seriously neglected its financial contractual obligations towards the Claimant over a substantial amount of time. Bearing in mind the Respondent’s allegation that it had not received a default notice from the Claimant, in spite of the Claimant having submitted a copy of a default notice, in light of said important delay in payment of such substantial part of the Claimant’s remuneration, the members of the Chamber deemed that the Claimant could in good faith believe that, in spite of a hypothetical notice informing about its default, the Respondent would have persisted in the non-compliance with the financial terms of the contract.

39. On account of the above and taking into consideration the Chamber’s longstanding jurisprudence in this respect, the Chamber decided that the Claimant had just cause to unilaterally terminate the contract on 9 August 2010 and that the Respondent is to be held liable for the early termination of the contract with just cause by the Claimant.

40. Furthermore, and in accordance with the general legal principle of pacta sunt servanda, the Chamber decided that the Respondent is liable to pay to the Claimant the amount which was outstanding under the contractual extension at the moment of the termination, i.e. EUR 2,489,947.

41. In continuation, having established that the Respondent is to be held liable for the early termination of the employment contract with just cause by the Claimant, the Chamber decided that, in accordance with art. 17 par. 1 of the Regulations, the Respondent is liable to pay compensation to the Claimant.

42. In this context, the Chamber outlined that, in accordance with said provision, 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.

43. 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 compensation clause was included in the relevant contract.

44. Subsequently, and in order to evaluate the compensation to be paid by the Respondent, the members of the Chamber took into account the remuneration due to the Claimant in accordance with the contractual extension as well as the time remaining on the same contract, along with the professional situation of the Claimant after the early termination occurred. In this respect, the Chamber pointed out that at the time of the termination of the relevant employment contract on 9 August 2010, the contractual extension would still run until 31 December 2011. Consequently, taking into account the financial terms of the contractual extension, the Chamber concluded that the remaining value of the contractual extension as from its early termination by the Claimant until the regular expiry of the contract amounts to EUR 6,000,000 and that such amount shall serve as the basis for the final determination of the amount of compensation for breach of contract.

45. In continuation, the Chamber remarked that following the early termination of the employment contract at the basis of the present dispute, the Claimant had found new employment with the club from country B, Club E, as from 27 January 2011 until 31 December 2011, with which club he would be remunerated with the total amount of 770,000, which corresponds to the approximate amount of EUR 336,000. Consequently, in accordance with the constant practice of the Dispute Resolution Chamber and the general obligation of the Claimant to mitigate his damages, such remuneration under the new employment contract shall be taken into account in the calculation of the amount of compensation for breach of contract.

46. In view of all of the above, the Chamber decided that the Respondent must pay the amount of EUR 5,664,000 to the Claimant as compensation for breach of contract.

47. As regards the Claimant’s request for 5% interest p.a. on the amounts to be awarded as of the respective due dates, the Chamber first of all noted that such request was only included in the Claimant’s amended claim of 20 June 2017. Indeed, the Claimant’s statement of claim dated 19 August 2010 does not include any request for interest. Therefore, and given the particular circumstance that the present matter has been pending for a considerable amount of time in light of the various proceedings following the DRC decision of 6 November 2014, the Chamber did not consider it appropriate to grant the Claimant interest on the amounts awarded as of the respective due dates.

48. The Dispute Resolution Chamber 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, Player A, is partially accepted, insofar as it is admissible.

2. The Respondent, Club C, has to pay to the Claimant outstanding remuneration in the amount of EUR 2,489,947, within 30 days as from the date of notification of this decision.

3. The Respondent has to pay to the Claimant compensation for breach of contract in the amount of EUR 5,664,000, within 30 days as from the date of notification of this decision.

4. In the event that the amounts due to the Claimant in accordance with the above-mentioned numbers 2. and 3. are not paid by the Respondent within the stated time limits, interest at the rate of 5% p.a. will fall due as of expiry of the aforementioned time limits and the present matter shall be submitted, upon request, to the FIFA Disciplinary Committee for consideration and a formal decision.

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

6. The Claimant is directed to inform the Respondent 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.

*****

Note relating to the motivated decision (legal remedy):

According to article 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