F.I.F.A. – Dispute Resolution Chamber / Camera di Risoluzione delle Controversie – labour disputes / controversie di lavoro (2018-2019) – fifa.com – atto non ufficiale – Decision 11 April 2019

Decision of the

Dispute Resolution Chamber

passed in Zurich, Switzerland, on 11 April 2019,

in the following composition:

Geoff Thompson (England), Chairman

Alexandra Gómez (Uruguay), member

Stefano Sartori (Italy), member

Daan de Jong (The Netherlands), member

Muzammil bin Mohamed (Singapore), 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 1 July 2016, the Country B player, Player A (hereinafter: the Claimant), and the Country D club, club C (hereinafter: the Respondent), concluded an employment contract (hereinafter: the contract) valid as from the date of its signature until 1 July 2018.

2. According to art. 7 of the contract, the Respondent undertook to pay to the Claimant, inter alia, the following remuneration:

- EUR 2,500 as monthly salary for the period as from 1 July 2016 until 31 December 2016;

- EUR 3,000 as monthly salary for the period as from 1 January 2017 until 31 January 2018;

- EUR 3,500 as monthly salary for the period as from 1 February 2018 until 1 July 2018.

Moreover, according to the contract, each monthly instalment was payable “by the 20th day of the month for the previous month”.

3. On 19 July 2017, the Claimant put the Respondent in default of payment of the total amount of EUR 9,000 corresponding to the outstanding salaries of April 2017, May 2017 and June 2017, granting the Respondent a deadline of 15 days to comply with its financial obligations. In his letter, the Claimant also mentioned that the Respondent forbid him “the entry to practices since yesterday”.

4. Subsequently, on 4 August 2017, the Claimant referred to his letter of 19 July 2017 –claiming that it remained unanswered by the Respondent– and unilaterally terminated the contract in writing, since no payment had been made by the latter.

5. On 5 July 2018, the Claimant lodged a claim against the Respondent before FIFA requesting outstanding remuneration and compensation for breach of contract in the total amount of EUR 49,000, plus 5% interest p.a. since 4 August 2017, broken down by the Claimant as follows:

- EUR 12,000 as outstanding salaries as from April 2017 until July 2017 in the amount of EUR 3,000 each;

- EUR 26,500 as compensation for breach of contract, corresponding to the residual value of the contract - namely EUR 35,500 as from August 2017 until June 2018 – minus the amount of EUR 9,000, which –according to the Claimant– corresponds to the amount he received from his new Country B club, club E, during the overlapping period. In this regard, the Claimant explained that the contract he signed with said Country B club entered into force in September 2017 and allegedly entitled him to receive a monthly salary of EUR 900;

- EUR 10,500 as additional compensation, corresponding to the sum of three monthly salaries in the amount of EUR 3,500 each, on the basis of art. 17.1 lit. ii) of the Regulations on the Status and Transfer of Players.

6. In his claim, the Claimant held that, as the Respondent had not paid his salaries for more three months, he had no alternative but to terminate the contract, and that the Respondent should be held liable for the early termination of the contract.

7. In its reply, the Respondent rejected the Claimant’s claim sustaining that, upon entering into the contract with the Claimant, “fulfilment of the contract obligations became impossible due to changed circumstances”.

8. In this regard, the Respondent explained that since 1 February 2017, it is immersed in a procedure of compulsory settlement before the District Court in Country D.

9. In this sense, the Respondent held that, as a consequence of being immersed in the procedure of compulsory settlement, it did not get the license to perform in the Premiere League of Country D during the season 2017/2018. Therefore, the Respondent allegedly concluded verbal mutual termination agreements with all the players, by which the Respondent allegedly “terminated the contracts with all players since the team [that played] in the Premier league no longer existed”.

10. Furthermore, the Respondent maintained that the Claimant did not fulfil his contractual obligations, since the latter stopped “training and performing” once the Respondent no longer competed.

11. Additionally, the Respondent stressed that, although “the contract itself does not determine which law is to be used”, the applicable law to the present dispute shall be Country D law, as the club’s registered office is located in Country D and the contractual obligations were to be performed in Country D. In this regard, the Respondent held that, in accordance with art. 329 of the “Obligation Code”, if the fulfilment of the contract becomes impossible “due to circumstance for which the debtor holds no responsibility, the obligation revoke”. In this regard, the Respondent held that “due to unexpected termination of the sponsorship agreement of the main sponsor […] the fulfilment of obligations became impossible without the debtor’s fault”.

12. In his replica, the Claimant stated that, since the contract did not contain any contractual provision as to the applicable law, the Regulations on the Status and Transfer of Players and, subsidiary, the law of Country F, shall apply to the present matter.

13. In addition, the Claimant argued that the fact of being in a procedure of compulsory settlement does not release the Respondent from its responsibility to comply with its financial obligations towards the Claimant. The Claimant also argued that the fact of no longer competing in the Premiere League of Country D, does not constitute just cause for the Respondent to terminate the contract. Moreover, the Claimant further held that he was never informed about the financial situation the Respondent was going through. In this context, the Claimant maintained that, being the Respondent aware of its insolvency situation, it should have acted in “good faith” and tried to send him on loan, since the contract was still running for one more season.

14. In its duplica, the Respondent maintained its previous arguments and also admitted having “paid the last pay-out in March 2017”.

15. By means of its correspondences dated 4 September 2017 and 17 January 2019, the Football Association of Country D confirmed to the FIFA Administration that the Respondent has remained affiliated to the Football Association of Country D and is currently participating in organized football within the competitions of the said association.

16. According to the information contained in the Transfer Matching System (TMS), on 8 September 2017, the Claimant signed a contract with the Country B club, club E, valid as from the date of its signature until 30 June 2018, whereby the player was entitled, inter alia, to a monthly salary of 45,000.

II. Considerations of the Dispute Resolution Chamber

1. First of all, the Dispute Resolution Chamber (hereinafter: the DRC or the Chamber) 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 5 July 2018. Consequently, the 2018 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 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 June 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 an Country B player and a Country D club.

3. Furthermore, the Chamber analysed which regulations should be applicable as to the substance of the matter. In this respect, the Chamber confirmed that in accordance with art. 26 par. 1 and 2 of the Regulations on the Status and Transfer of Players (edition June 2018), and considering that the claim was lodged on 5 July 2018, the June 2018 edition of the aforementioned 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. In particular, the Chamber recalled that, in accordance with art. 6 par. 3 of Annex 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. Having said this, the Chamber proceeded with an analysis of the circumstances surrounding the present matter, the parties’ arguments as well the documentation on file, 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.

6. First of all, the members of the Chamber acknowledged that, on 1 July 2016, the Claimant and the Respondent had concluded an employment contract valid as from the date of its signature until 1 July 2018, pursuant to which the Respondent undertook, inter alia, to pay to the Claimant: i) a monthly salary of EUR 2,500 for the period between 1 July 2016 and 31 December 2016, ii) a monthly salary of EUR 3,000 for the period between 1 January 2017 and 31 January 2018 and iii) a monthly salary of EUR 3,500 for the period between 1 February 2018 and 1 July 2018.

7. Furthermore, the members of the DRC took note of the fact that, on 19 July 2017, the Claimant put the Respondent in default of payment of the amount of EUR 9,000, corresponding to his outstanding salaries of April 2017, May 2017 and June 2017, setting a time limit of 15 days in order to remedy the default.

8. Moreover, the DRC took note that, according to the Claimant, he had just cause to unilaterally terminate the employment contract on 4 August 2017, since the Respondent failed to reply to his default notice dated 19 July 2017 and since no payment had been made by the latter in this respect. In this regard, the Claimant affirmed that he had no alternative but to terminate the contract and deemed that the Respondent should be held liable for the early termination of said contract.

9. In continuation, the Chamber took note that the Respondent, for its part, maintained that, since 1 February 2017, it is immersed in a procedure of compulsory settlement before the District Court in Country D, and that, in view of the fact that i) the Respondent’s office is located in Country D and ii) the contractual obligations were to be performed in Country D, Country D law is applicable and prevails over any other law.

10. In this context, the members of the DRC first wished to stress that, when deciding a dispute before the DRC, FIFA’s regulations prevail over any national law chosen by the parties. In this regard, the Chamber emphasized that the main objective of the different FIFA Regulations is to create a standard set of rules to which all the actors within the football community are subject to and can rely on. This objective would not be achievable if the DRC would have to apply the national law of a specific party on every dispute brought to it. Therefore, the Chamber deemed that it is not appropriate to apply the principles of a particular national law to a dispute brought before it but rather the Regulations on the Status and Transfer of Players, general principles of law and, where existing, the Chamber’s well-established jurisprudence.

11. In continuation, the Chamber noted that the Respondent affirmed that, as a consequence of being immersed in the procedure of compulsory settlement, it did not get the license to perform in the Premiere League of Country D during the season 2017-2018 and that said circumstances allegedly led it to conclude “verbal mutual termination agreements with all the players”, because, pursuant to Country D law, if contractual obligations become impossible to fulfil, obligations revoke. For these reasons, the Respondent rejected the Claimant’s claim in its entirety.

12. Furthermore, the Chamber also observed that the Respondent affirmed that the Claimant did not fulfil his contractual obligations, since the Claimant allegedly stopped “training and performing” once the Respondent no longer competed. Furthermore, the DRC noted that the Respondent held that “due to unexpected termination of the sponsorship agreement of the main sponsor […] the fulfilment of obligations became impossible without the debtor’s fault”.

13. In light of the foregoing, the DRC considered that the underlying issue in this dispute, considering the parties’ position, was to determine as to whether the Claimant had just cause to terminate the employment contract and to determine the consequences thereof.

14. In this context, the Chamber deemed it appropriate to clarify that, in accordance with art. 12 par. 3 of the Procedural Rules, in the present case, the Respondent bore the burden of proving either the payment of the Claimant’s salaries or that it had a valid reason for not having done so.

15. With respect to the request put forward by the Respondent to reject the claim of the Claimant due to its “procedure of compulsory settlement”, the Chamber stressed that, in accordance with the jurisprudence of both the DRC and the Court of Arbitration for Sport, bankruptcy/insolvency procedures do not affect procedures in front of the DRC. In fact, the Chamber wished to outline that it is only requested to address the recognition of the Claimant’s claim and not the execution of a possible debt. What is more, the members of the Chamber noted that, according to the correspondence dated 4 September 2017 and 17 January 2019 of the Football Association of Country D, the Respondent remains affiliated to the Football Association of Country D and is currently participating in organised football within the competitions of the said association.

16. On account of the above, the Chamber was of the unanimous opinion that the Respondent cannot use its situation of insolvency, for which the Claimant holds no liability, as an exemption to avoid complying with its financial obligations towards the Claimant. Consequently, the Chamber decided that the argumentation of the Respondent cannot be followed on this point.

17. Furthermore, and concerning the Respondent’s allegations that it allegedly concluded a mutual termination with the player and that the Claimant allegedly stopped “training and participating” once the club no longer competed in the Premiere League of Country D, the Chamber observed that the Respondent had not provided any evidence in support of its argumentation. Consequently, the Chamber decided to reject the Respondent’s argument in this connection.

18. In addition, the Chamber recalled that the Respondent alleged having had some financial difficulties in order to justify its non-payment of the Claimant’s outstanding salaries. In particular, the DRC noted that the Respondent held that “due to unexpected termination of the sponsorship agreement of the main sponsor […] the fulfilment of obligations became impossible without the debtor’s fault”.

19. However, the Chamber wished to stress that, in line with its well-established jurisprudence, a club’s financial difficulties cannot be considered a valid justification for non-compliance with its essential contractual obligation deriving from the signature of an employment contract, that is, to pay a player’s remuneration in full and in a timely manner. Consequently, the Chamber also decided that this argumentation of the Respondent cannot be followed on this point.

20. With the above in mind, the Chamber highlighted that on the basis of the parties’ submissions, it could be noted that the Respondent had admitted “having paid the last pay-out in March 2017”. In particular, the Chamber observed that the Respondent did not contest that, by the time the Claimant addressed it with his default letter on 19 July 2017, his salaries of April, May and June 2017 were outstanding. Moreover the members of the DRC observed that it also remained undisputed that the Claimant provided the Respondent with 15 days to remedy its default and that the Respondent never reacted to the default letter.

21. In continuation, taking into account the consideration under point. II./3. above, the DRC referred to art. 14bis par. 1 of the Regulations, which, inter alia, stipulates that, in the case of a club unlawfully failing to pay a player at least two monthly salaries on their due dates, the player will be deemed to have a just cause to terminate his contract, provided that he has put the debtor club in default in writing and has granted a deadline of at least 15 days for the debtor club to fully comply with its financial obligation(s).

22. Consequently, on account of the above and considering that, when the player terminated the contract, at least two monthly salaries were due despite having the Claimant provided the Respondent with 15 days to remedy the default, the DRC concluded that, on 4 August 2017, the Claimant had just cause to unilaterally terminate the employment contract.

23. As a result, the Chamber decided that the Respondent is to be held liable for the early termination of the employment contract with just cause by the Claimant.

24. Having established that the Respondent is to be held liable for the early termination of the employment contract, the DRC focused his attention on the consequences of such termination. Taking into consideration art. 17 par. 1 of the Regulations, the DRC established that the Claimant is entitled to receive from the Respondent compensation for breach of contract, in addition to any outstanding payments on the basis of the relevant employment contract.

25. Along those lines, the DRC firstly referred to the Claimant’s request regarding the outstanding remuneration at the time of the unilateral termination of the employment contract. In this respect, the DRC concurred that the Respondent must fulfil its obligations as per the employment contract in accordance with the general legal principle of “pacta sunt servanda”.

26. Consequently, and bearing in mind that the Claimant terminated his employment contract on 4 August 2017, the Chamber decided that the Respondent is liable to pay to the Claimant outstanding remuneration in the amount of EUR 12,000, pertaining to his monthly salaries of April to June 2017 as well as of July 2017, since the Claimant fully worked also during said month.

27. In addition, taking into consideration the specific request of the Claimant on the point, the Chamber decided to award the latter interest at the rate of 5% p.a. on the amount of EUR 12,000 as from the date of termination, i.e. 4 August 2017, until the date of effective payment.

28. Moreover, and taking into consideration art. 17 par. 1 of the Regulations, the Chamber decided that the Claimant is entitled to receive compensation for breach of contract from the Respondent.

29. In continuation, the DRC focused his attention on the calculation of the amount of compensation for breach of contract due to the Claimant by the Respondent in the case at stake. In doing so, the DRC 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 player under the existing contract and/or the new contract, the time remaining on the existing contract up to a maximum of five years, and depending on whether the contractual breach falls within the protected period.

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 observed that the employment contract does not contain any such clause.

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 parameters set out in art. 17 par. 1 of the Regulations. Bearing in mind the foregoing, the Chamber proceeded with the calculation of the monies payable to the Claimant under the terms of the employment contract as from its termination and concluded that the Claimant would have been entitled to receive EUR 35,500 as remuneration had the employment contract been executed until its regular expiry date, i.e. 1 July 2018. Consequently, the Chamber concluded that the amount of EUR 35,500 serves as the basis for the final determination of the amount of compensation for breach of contract in the case at hand.

32. In continuation, the Chamber assessed 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 able to reduce his loss of income. In this respect, the DRC deemed it necessary to refer to the first sentence of art. 17 par. 1 lit. ii) of the Regulations, according to which, in case the player signed a new contract by the time of the decision, the value of the new contract for the period corresponding to the time remaining on the prematurely terminated contract shall be deducted from the residual value of the contract that was terminated early (the ”Mitigated Compensation”).

33. In respect of the above, and according to the information contained in the TMS, the Chamber recalled that, on 8 September 2017, the Claimant signed an employment contract with the Country B club, club E, valid as from the date of signature until 30 June 2018, according to which, he was entitled to a monthly salary of 45,000, which corresponds to approximately EUR 21,500. On account of the above, such amount shall be deducted, leading to a mitigated compensation in the amount of EUR 14,000.

34. Subsequently, the Chamber turned its attention to the second sentence of art. 17 par. 1 lit. ii) of the Regulations, according to which, in addition to the mitigated compensation, the player shall be entitled to an additional compensation of three monthly salaries, subject to the early termination of the contract being due to overdue payables.

35. With the above in mind, the Chamber decided to award the Claimant additional compensation corresponding to three monthly salaries, i.e. EUR 9,000, in accordance with the above-mentioned provision.

36. Consequently, on account of all the above-mentioned considerations, the Chamber decided that the Respondent must pay the amount of EUR 23,000 as compensation for breach of contract to the Claimant, which is considered by the Chamber to be a fair and reasonable amount.

37. In addition, taking into consideration the player’s claim, the Chamber decided to award the Claimant interest at the rate of 5% p.a. as of the date of the claim, i.e. 5 July 2018, until the date of effective payment.

38. Therefore, the DRC decided to partially accept the Claimant’s claim and concluded its deliberations by rejecting any further claim of the Claimant.

39. Furthermore, taking into account the consideration under number II./3. above, the Chamber referred to par. 1 and 2 of art. 24bis of the Regulations, which stipulate that, with its decision, the pertinent FIFA deciding body shall also rule on the consequences deriving from the failure of the concerned party to pay the relevant amounts of outstanding remuneration and/or compensation in due time.

40. In this regard, the Chamber pointed out that, against clubs, the consequence of the failure to pay the relevant amounts in due time shall consist of a ban from registering any new players, either nationally or internationally, up until the due amounts are paid and for the maximum duration of three entire and consecutive registration periods.

41. Therefore, bearing in mind the above, the DRC decided that, in the event that the Respondent does not pay the amounts due to the Claimant within 45 days as from the moment in which the Claimant, following the notification of the present decision, communicates the relevant bank details to the Respondent, a ban from registering any new players, either nationally or internationally, for the maximum duration of three entire and consecutive registration periods shall become effective on the Respondent in accordance with art. 24bis par. 2 and 4 of the Regulations.

42. Finally, the Chamber recalled that the above-mentioned ban will be lifted immediately and prior to its complete serving upon payment of the due amounts, in accordance with art. 24bis par. 3 of the Regulations.

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 outstanding remuneration in the amount of EUR 12,000 plus 5% interest p.a. on said amount as from 4 August 2017 until the date of effective payment.

3. The Respondent has to pay to the Claimant compensation for breach of contract in the amount of EUR 23,000 plus 5% interest p.a. on said amount as from 5 July 2018 until the date of effective payment.

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

5. The Claimant is directed to inform the Respondent, immediately and directly, preferably to the e-mail as indicated on the cover letter of the present decision, of the relevant bank account to which the Respondent must pay the amounts mentioned under points 2. and 3. above.

6. The Respondent shall provide evidence of payment of the due amounts in accordance with points 2. and 3. above to FIFA to the e-mail address psdfifa@fifa.org, duly translated into one of the official FIFA languages (English, French, German, Spanish).

7. In the event that the amounts due plus interest in accordance with points 2. and 3. above are not paid by the Respondent within 45 days as from the notification by the Claimant of the relevant bank details to the Respondent, the Respondent shall be banned from registering any new players, either nationally or internationally, up until the due amounts are paid and for the maximum duration of three entire and consecutive registration periods (cf. art. 24bis of the Regulations on the Status and Transfer of Players).

8. The ban mentioned in point 7 above will be lifted immediately and prior to its complete serving, once the due amounts are paid.

9. In the event that the aforementioned sum plus interest is still not paid by the end of the ban of three entire and consecutive registration periods, the present matter shall be submitted, upon request, to FIFA’s Disciplinary Committee for consideration and a formal decision.

*****

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

e-mail: info@tas-cas.org

For the Dispute Resolution Chamber:

Emilio García Silvero

Chief Legal & Compliance Officer

Encl.: CAS directives