F.I.F.A. – Dispute Resolution Chamber / Camera di Risoluzione delle Controversie – labour disputes / controversie di lavoro (2017-2018) – fifa.com – atto non ufficiale – Decision29 March 2018

Decision of the

Dispute Resolution Chamber

passed in Zurich, Switzerland, on 29 March 2018,

in the following composition:

Thomas Grimm (Switzerland), Deputy Chairman

Roy Vermeer (The Netherlands), member

Alexandra Gomez (Uruguay), member

Joel Talavera (Paraguay), member

Wouter Lambrecht (Belgium), 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 between the parties

I. Facts of the case

1. On 18 January 2017, the Player of Country B, Player A (hereinafter: the Claimant) and the Club of Country D, Club C (hereinafter: the Respondent), concluded an employment contract (hereinafter: the contract), valid as from the date of signature until the end of the 2018/2019 season in Country D. According to the information contained in the Transfer Matching System (TMS), the 2018/2019 season in Country D will end on 31 May 2019.

2. Pursuant to the contract, the Claimant was entitled to receive the following remuneration:

 For the 2016/2017 season, the amount of EUR 375,000:

- EUR 150,000 to be paid to the Claimant upon signature of the contract;

- EUR 225,000 as monthly salary in 5 equal instalments of EUR 45,000, between January 2017 until May 2017 payable at the end of each month.

 For the 2017/2018 season, the amount of EUR 800,000:

- EUR 300,000 payable as advance payment on 1 July 2017;

- EUR 500,000 payable as monthly salary in 10 instalments between the period of August 2017 and May 2018 due at the end of each month.

 For the 2018/2019 season, the amount of EUR 850,000:

- EUR 350,000 payable as advance payment on 1 July 2018;

- EUR 500,000 payable as monthly salary in 10 instalments between the period August 2018-May 2019 due at the end of each month.

3. Furthermore, the contract provides in its clause 6.2 the following: “In case the [the Respondent] stays up at the League E at the end of the football season of 2016/2017, [the Respondent] shall pay to the [the Claimant] in the amount of EUR 25,000, in the date of 31 May 2017”.

4. Subsequently, clause 6.4 provides following: “In addition to the other payments which determined in this Contract, the [the Respondent] shall pay to [the Claimant] the amount of 10,000 Euro in relation with the 2016/2017 football season in 5 equal instalments between the period January 2017-May 2018.

5. Furthermore, in accordance with clause 8.3 of the contract: ”In case of non payment of two monthly salaries of [the Claimant] in full or in part by the [the Respondent] and with this notification [the Claimant] shall give to [the Respondent] 30 days for paying of all outstanding amounts of [the Claimant] with regard to this contract in full. In case of that [the Respondent] will not pay all of the outstanding amounts of [the Claimant] with regard to this contract in full to the player in the aforesaid time limit, [the Claimant] shall have the exclusive right to unilaterally terminate the contract with just cause. In this case [the Claimant] shall be free to sign contracts with any other clubs.”

6. The contract does not contain a clause regarding the financial consequences in case of breach of contract.

7. On 24 March 2017, the Claimant sent via facsimile a letter to the Respondent in which it is stated that its subject is “PLAYER A – NONCOMPLIANCE OF FINANCIAL OBLIGATIONS. WARNING FOR PAYMENT” (hereinafter: the default notice). In accordance with the default notice, the Claimant put the Respondent in default of payment requesting his salaries of January and February 2017, providing it a deadline to pay until 24 April 2017. In said letter, the Claimant stated: “So, you are now notified to pay the delayed salaries, within the time limit provided in article 8 paragraph 3 of the referred professional football contract, signed on 18 January 2017. Otherwise, we will exercise [the Claimant]’s right to immediately terminate the employment contract with just cause. Notwithstanding, considering that the time limit provided on the referred article will end on 24 April 2017, the salary of March will be also due on that date and for that reason we also expressly request the payment of the indicated monthly salary.”.

8. On 25 April 2017, the Claimant sent via facsimile a letter to the Respondent with the subject “CONTRACT TERMINATION WITH JUST CAUSE - FAILURE TO PAY MONTHLY SALARIES – BREACH OF FUNDAMENTAL DUTIES” (hereinafter: the termination letter). The termination letter reads as follows: “As contractually agreed we’ve gave to the Club the 30 days for paying all outstanding amounts and checking as of today that your club culpably didn’t pay to the player the missing amounts due as salaries, we consequently conclude that the club fail to provide the conditions to exercise his professional activity and, on behalf of the player, we are forced to immediately terminate with just cause the employment contract that binds player, Player A to your club, in the terms of the articles 15 of the FIFA Regulations on the Status and Transfer of Players 2016.”

9. On 8 May 2017, the Claimant lodged a claim in front of FIFA against the Respondent for outstanding remuneration and compensation for breach of contract, requesting the total amount of EUR 1,870,000. The requested amount was broken down as follows:

- EUR 132,500 as outstanding remuneration corresponding to the months of January, February, March and 25 days of April 2017,

- EUR 10,000 as “expenses” as per clause 6.4 of the contract;

- EUR 25,000 as Bonus payment in accordance with clause 6.2 of the contract concerning the League E;

- EUR 1,702,500 as compensation for breach of contract equivalent to the residual value of the contract according to the Claimant as from 26 April 2017;

- 5% p.a. interest as from 25 April 2015 on all the above-mentioned amounts.

10. In his claim, the Claimant claimed having received from the Respondent only two partial salary payments of EUR 20,000. Therefore, according to the Claimant, at the moment of the termination 3 monthly salaries were outstanding. Consequently, the Claimant argued that taking into account his default notice of 24 March 2017, he had just cause to terminate the contract on 25 April 2017 by means of his termination notice.

11. In its reply to the claim, the Respondent maintained that the Claimant terminated the contract on 25 March 2017 and that up to said date, the Claimant was entitled to receive EUR 66,000, amount that consisted in following monthly salaries:

- EUR 21,000 as the monthly salary for the period from 18 January 2017 to 31 January 2017.

- EUR 45,000 as the monthly salary for February 2017 to 24 March 2017.

12. In this regard, the Respondent argued that from the EUR 66,000 the Claimant was entitled to up to 24 March 2017, it allegedly paid EUR 48,234.41 to the Claimant, as follows:

- 19,000 on 9 February 2017, which according to the Respondent corresponds to EUR 4,802;

- 13,500 on 16 March 2017, which according to the Respondent corresponds to EUR 3,432.31;

- EUR 20,000 on 1 March 2017;

- EUR 20,000 on 13 April 2017.

13. Along this line, the Respondent maintained that at “the date of the termination by the player on 25 March 2017” the debt towards the Claimant was EUR 17,765.59.

14. Therefore, the Respondent sustained that the Claimant terminated the contract without just cause, as the termination was initiated by the Claimant on the third month out of a 2 and a half years long agreed contractual period.

15. Lastly, the Respondent maintained that the Claimant is not entitled to the League E Bonus for the reason that he terminated the contract before the end of the 2016/2017 season.

16. In spite of having been invited to do so, the Claimant provided no further comments.

17. Upon FIFA’s request, the Claimant confirmed that on 13 July 2017, he signed an employment contract with the Club of Country F, Club G, valid as from date of signature until 31 May 2018, according to which the Claimant is entitled to receive a monthly salary of EUR 8,900.

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 matter at hand. In this respect, it took note that the present matter was submitted to FIFA on 8 May 2017. Consequently, the Rules governing the procedures of the Players’ Status Committee and the Dispute Resolution Chamber (edition 2017; 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 (edition 2018) the Dispute Resolution Chamber is competent to deal with the matter at stake, which concerns an employment-related dispute with an international dimension between a Player of Country B and a Club of Country D.

3. Furthermore, the Chamber analysed which regulations should be applicable as to the substance of the matter. In this respect, it confirmed that in accordance with art. 26 par. 1 and 2 of the Regulations on the Status and Transfer of Players (edition 2018), and considering that the present claim was lodged on 8 May 2017, the 2016 edition of said regulations (hereinafter: the Regulations) is applicable to the matter at hand as to the substance.

4. The competence of the Chamber and the applicable regulations having been established, the Chamber entered into the substance of the matter. 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. Equally, 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 TMS.

5. In this respect, the Chamber recalled that on 18 January 2017, the parties had signed an employment contract valid as from 18 January 2017 until the end of the 2018/2019 season in Country D, which according to the information contained in TMS will end on 31 May 2019.

6. In continuation, the Chamber observed that the Claimant had lodged a claim before FIFA against the Respondent seeking payment in the total amount of EUR 1,870,000, corresponding to outstanding remuneration for the months of January 2017 until 25 April 2017, plus additional amounts based on art. 6.2 and 6.4 of the contract, as well as compensation for breach of contract, since according to the Claimant, he had just cause to terminate the contract on 25 April 2017.

7. Subsequently, the Chamber noted that the Respondent rejected the Claimant’s claim arguing that the Claimant terminated the contract on 25 March 2017 without just cause, since he terminated the contract during the third month of a two and a half years long contract. Moreover, the members of the Chamber duly took note that, according to the Respondent, the player was only allegedly entitled to EUR 66,000 up to 24 March 2017 as salaries and that such amount was partially paid, as the Respondent held that it remitted the amount of EUR 48,234.31 to the Claimant. In consequence, it was observed that according to the Respondent, “at the date of the termination by the player on 25 March 2017”, the debt towards the Claimant amounted to EUR 17,765,59.

8. Along this line, the DRC found it worthwhile to underline that despite being invited to present its comments on the reply of the Respondent, the Claimant did not do so.

9. Taking into account the contradictory positions of the parties in the matter at hand, the Chamber concluded that it first needs to establish on which date the contract was terminated by the Claimant and subsequently, whether the employment contract had been unilaterally terminated with or without just cause and which party was responsible for the early termination of the contractual relationship in question and the consequences thereof.

10. With the above in mind, in order to establish the date of termination of the contract, the Chamber proceeded with an analysis of the circumstances surrounding the present matter, the parties’ arguments as well the documentation on file.

11. In this regard, the Chamber could not agree with the Respondent’s allegation that the Claimant terminated the contract on 25 March 2017. Indeed the DRC noted that although the Claimant sent a default notice to the Respondent on 24 March 2017, such letter did not refer to the unilateral termination of the contract by the Claimant.

12. In continuation, the Chamber analysed the content of the Claimant’s letter dated 25 April 2017 - which the Respondent did not contest receiving - and thought to emphasise that in its view, said letter unequivocally expresses the intention of the Claimant to terminate the contract that bound the parties up to said date. Consequently, the Chamber established that the date of the termination of the contract by the Claimant was 25 April 2017.

13. The Chamber focused then on determining whether contract had been terminated with or without just cause and to determine the financial consequences for the party that is to be held liable for the early termination of the pertinent employment contract.

14. In this respect, the Chamber observed that the parties in the matter at hand, in use of their own free will and under the principle of contractual freedom, had defined what constituted just cause to terminate the contract by means of clause 8.3 of the contract.

15. In this regard, the Chamber recalled that according to clause 8.3 of the contract, in case the Respondent failed to remit to the Claimant, partially or fully, two monthly salaries, the Claimant shall warn the Respondent about the circumstance, giving the Respondent 30 days to pay the outstanding amounts. According to the same provision, the Claimant is entitled to unilaterally terminate the contract with just cause should the Respondent fail to remedy the default in full within the 30 days granted to do.

16. In this context, the DRC noted that as established above, by means of his default notice of 24 March 2017 and while referring to clause 8.3 of the contract, the Claimant put the club in default requesting his salaries of January and February 2017, providing the Respondent a deadline to pay until 24 April 2017. Subsequently, the Claimant terminated the contract on 25 April 2017 by means of its termination notice i.e. after more than 30 days had elapsed since the default notice dated 24 March 2017, stating that the amounts requested in said default notice had not been paid by the Respondent within the deadline granted to do so.

17. Along this line, the Chamber wished to emphasize that it could not agree with the Respondent’s allegation that the Claimant was only entitled to EUR 66,000 as salaries up to 24 March 2017, since taking into account the clear terms of the contract, for the 2016/2017 season, the Claimant was entitled, inter alia, to EUR 225,000 as monthly salary in 5 equal instalments of EUR 45,000, between January 2017 until May 2017 payable at the end of each month. Therefore, at the very least and based on the contract, the Claimant was supposed to receive EUR 90,000 as salary for the months of January and February 2017.

18. Moreover, the DRC found important to note that although the Respondent held that it remitted the amount of EUR 48,234.31 to the Claimant in connection with the aforementioned salaries, allegation which remained uncontested by the Claimant, the Respondent, itself, acknowledged that the outstanding amounts as requested by the Claimant in his default notice were not paid in full, as the debt towards the Claimant still amounted to, allegedly, EUR 17,765.59.

19. Taking into consideration all the previous deliberations, the Chamber concluded that the the Claimant acted in accordance with clause 8.3 of the contract and that despite the default notice of 24 March 2017, by means of which the Claimant granted the opportunity to the Respondent in order to remedy the breach, the Respondent had not fully complied with its obligations and that it thus be concluded that the Respondent had seriously neglected its contractual obligations towards the Claimant in a continuous and substantial manner. As a consequence, the Chamber was of the unanimous opinion that the foregoing situation legitimately caused the Claimant’s confidence in the Respondent respecting its future duties under the contract to be lost and that he had just cause to terminate the employment contract with the Respondent on 25 April 2015. Consequently, the Respondent is to be held liable for the early termination of the employment contact with just cause by the Claimant.

20. In continuation, having established that the Respondent is to be held liable for the early termination of the employment contract, the Chamber focused its attention on the consequences of such termination. Taking into consideration art. 17 par. 1 of the Regulations, the Chamber decided that the Claimant is entitled to receive from the Respondent an amount of money as compensation for breach of contract in addition to any outstanding payments on the basis of the relevant employment contract.

21. The Chamber then reverted to the Claimant’s financial claim, which includes outstanding remuneration in the amount of EUR 132,500, corresponding to the salaries of January, February March and 25 days of April 2017. Moreover, the Claimant requested the EUR 10,000 as “expenses” as per clause 6.4 of the contract, as well as EUR 25,000 as Bonus payment in accordance with clause 6.2 of the contract concerning the League E.

22. In this respect, the Chamber observed that the Claimant, taking into account the date of termination, i.e. 25 April 2017, would be, in principle entitled to the salaries of January 2017 to April 2017 in the total amount of EUR 180,000, as well as the specified amount provided in clause 6.4 of the contract until April 2017 of EUR 8,000.

23. As regards the payment of EUR 25,000 requested by the Claimant in relation to a bonus under clause 6.2 of the contract, which the Claimant did not substantiate with any documentary evidence and bearing in mind art. 12 par. 3 of the Procedural Rules, in accordance with which any party claiming a right on the basis of an alleged fact shall carry the burden of proof, the DRC concluded that the Claimant did not provide sufficient evidence corroborating his entitlement to said bonus. Consequently, the Chamber decided to reject this part of the Claimant’s claim.

24. Furthermore, the Chamber noted that the alleged amount of EUR 48,234.41 paid by the Respondent in relation to salaries from January 2017 until the date of termination remained uncontested by the Claimant.

25. Consequently, considering the above the Chamber established that the Claimant is entitled to the total amount of EUR 139,765 as outstanding remuneration, which corresponds to the total outstanding remuneration of EUR 180,000 due until the date of termination, minus the amoun of EUR 48,234.41, which the Claimant did not contest having received.

26. Therefore, the DRC, while referring to the principle of “pacta sunt servanda”, deemed that the Claimant is entitled to outstanding remuneration in the amount of EUR 139,765.

27. In addition, taking into account the Claimant’s request, the Chamber decided that the Respondent must pay to the Claimant interest of 5% p.a. on the amount of EUR 139,765 as from the date of termination until the date of effective payment, as requested.

28. In continuation, the Chamber decided that, taking into consideration art. 17 par. 1 of the Regulations, the Claimant is entitled to receive from the Respondent compensation for breach of contract in addition to any outstanding salaries on the basis of the relevant employment contract.

29. Subsequently, the Chamber focused its attention on the calculation of the amount of compensation payable to the Claimant by the Respondent in the case at stake. In doing so, the members of the Chamber firstly recapitulated that, in accordance with art. 17 par. 1 of the Regulations, the amount of compensation shall be calculated, in particular and unless otherwise provided for in the contract at the basis of the dispute, with due consideration for the law of the country concerned, the specificity of sport and further objective criteria, including in particular, the remuneration and other benefits due to the 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.

30. In application of the relevant provision, the Chamber held that it 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 Chamber established that no such compensation clause was included in the employment contract at the basis of the matter at stake.

31. As a consequence, the members of the Chamber 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 Chamber recalled that said provision provides for a non-exhaustive enumeration of criteria to be taken into consideration when calculating the amount of compensation payable.

32. The members of the Chamber then turned their attention to the remuneration and other benefits due to the Claimant under the existing contract and/or the new contract, which criterion was considered by the Chamber to be essential. The members of the Chamber deemed it important to emphasise that the wording of art. 17 par. 1 of the Regulations allows the Chamber to take into account both the existing contract and the new contract, if any, in the calculation of the amount of compensation.

33. Bearing in mind the foregoing, the Chamber proceeded with the calculation of the monies payable to the player under the terms of the employment contract as from the date of termination with just cause by the Claimant until 31 May 2019, bearing in mind that he would have received in total EUR 1,697,000 as remuneration for the period as from May 2017 until May 2019. Consequently, the Chamber concluded that the amount of EUR 1,697,000 serves as the basis for the final determination of the amount of compensation for breach of contract in the case at hand.

34. In continuation, the Chamber 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 player’s general obligation to mitigate his damages.

35. In this respect, the Chamber recalled that the Claimant had found new employment with the Club of Country F, Club G, as from 13 July 2017 until 31 May 2018. In accordance with the employment contract signed between the Claimant and Club G, the Claimant was entitled to a monthly salary of EUR 8,900 and therefore would receive the total amount of EUR 89,000 until 31 May 2018.

36. Consequently, on account of the above-mentioned considerations and the specificities of the case at hand as well as the Claimant’s general obligation to mitigate his damage, the Chamber decided to partially accept the Claimant’s claim and that the Respondent must pay the amount of EUR 1,608,000 as compensation for breach of contract to the Claimant, which is considered reasonable and justified amount of compensation.

37. In addition, taking into account the Claimant’s request as well as the constant practice of the Dispute Resolution Chamber, the DRC decided that the Respondent must pay to the Claimant interest of 5% p.a. on the amount of compensation as of the date on which the claim was lodged, i.e. 8 May 2017, until the date of effective payment.

38. 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.

2. The Respondent, Club C, has to pay to the Claimant, within 30 days as from the date of notification of this decision, outstanding remuneration in the amount of EUR 139,765, plus 5% interest p.a. on said amount as from 25 April 2017 until the date of effective payment.

3. The Respondent has to pay to the Claimant, within 30 days as from the date of notification of this decision, compensation for breach of contract in the amount of EUR 1,608,000 plus 5% interest p.a. on said amount as from 8 May 2017 until the date of effective payment.

4. In the event that the amounts plus interest due to the Claimant in accordance with the above-mentioned numbers 2. and 3. are 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.

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.

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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:

Emilio García Silvero

Chief Legal & Integrity Officer

Encl: CAS directives