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 24 August 2018

Decision of the

Dispute Resolution Chamber

passed in Zurich, Switzerland, on 24 August 2018,

in the following composition:

Geoff Thompson (England), Chairman

Johan van Gaalen (South Africa), member

Joaquim Evangelista (Portugal), member

Todd Durbin (USA), member

Stefano La Porta (Italy), member

on the claim presented by the player,

Player A, from country A,

as Claimant

against the club,

Club B, from country B

as Respondent

regarding an employment-related dispute

between the parties

I. Facts of the case

1. On 19 January 2017, the player, Player A, from country A (hereinafter: Claimant), and the club, Club B, from country B (hereinafter: Respondent), signed an employment contract valid as from 21 January 2017 until 30 June 2018 (hereinafter: contract).

2. In accordance with the contract, the Claimant was entitled to receive EUR 3,000 net as monthly salary as well as a monthly EUR 600 for accommodation as well as match bonuses.

3. In its preamble, the contract reads, inter alia, that it is concluded upon a precondition that the Claimant is legally capable to conclude an employment contract under the law of country B.

4. Art. 3 of the contract deals with the minimum annual salary, also for a foreign player who is not a EU/EEA national, referring to applicable collective agreements, regulations of the Football Association of country B and a decree.

5. According to art. 20 of the contract, the parties, inter alia, agree that the contract may be suspended in case of non-issue of a work permit and/or residence permit by the competent authorities for reasons beyond the control of the Respondent.

6. According to art. 21 of the contract, any party who wishes to terminate the contract before expiry of the agreed term shall pay a compensation equal to the amount of salaries owed by the expiry of such term with a maximum of double the amount determined in accordance with Art. 5.2 of “Act of 24.02.1978”. This article has a hand-written, non-initialled / non-signed, addition reading in its translated version that EUR 75,000 shall be payable.

7. On 24 February 2017, the parties signed an addendum to the contract (hereinafter: addendum), by which they agreed that the Claimant’s fix monthly salary was of EUR 6,550 gross with other benefits already being included therein.

8. By letter dated 30 March 2017, the authorities of country B informed the Respondent of their refusal to the latter’s application for a work permit for the Claimant, for the reason that the employer proposed work without a work permit and that the employee performed work without such permit. The letter includes a reference to the Respondent’s possibility of appeal against the refusal.

9. On 8 April 2017, the Respondent issued a letter “to whom it may concern”, in which it declares, inter alia, that the Claimant is required to travel to country A in order to sort out all paperwork necessary to obtain a work permit to render his services to the Respondent.

10. By correspondence dated 2 June 2017, the Claimant put the Respondent in default of payment of his salary from March to May 2017 and he highlighted that the Respondent had still not provided him with a work permit, granting the latter 10 days to pay and to inform him about the work permit situation, reserving his right to terminate the contract. On 8 June 2017, the Claimant sent the Respondent a reminder and final notification regarding his letter of 2 June 2017.

11. In its reply to the Claimant dated 12 June 2017, the Respondent denied that it would be obliged to obtain his work permit and it rejected the Claimant’s financial request, since he left country B on 10 April 2017.

12. On 14 June 2017, the Claimant terminated the employment contract in writing highlighting that he disagreed with the Respondent’s position and that the Respondent was no longer interested in his services.

13. On 16 June 2017, the Respondent contested the contents of the Claimant’s notice of 14 June 2017.

14. On 19 June 2017, the Claimant lodged a claim against the Respondent in front of FIFA maintaining that he had just cause to terminate the contract and that the Respondent must be held liable for payment of compensation, alleging that the Respondent failed to obtain the necessary work permit, as a result of which the Respondent deprived him of the opportunity to fulfil the contract.

15. Therefore, the Claimant asked to be awarded payment of the following monies:

a. EUR 22,706 as outstanding salary for March, April, and May 2017 as well as 14 days of June 2017, plus 5% interest “for late payment”;

b. EUR 75,000 as compensation plus 5% interest as of 12 June 2017.

16. The Claimant explained that the parties signed the addendum following the country B’s authorities’ first refusal, on 31 January 2017, to issue a work permit for the reason that his salary was stipulated at a lower level than provided by local law.

17. He further stated that he had received the net amounts of EUR 1,958 and EUR 4,250 from the Respondent for January and February 2017, respectively.

18. According to the Claimant, following the second refusal of the country B authorities to issue a work permit, on 8 April 2017, the Respondent forced him to return to country A, which he did.

19. The Claimant held that the reasons for both refusals to issue a work permit cannot be imputed to him. He stressed that he was not aware of the relevant requirements for the issuance of the work permit.

20. Furthermore, the Claimant deemed that in its letter of 12 June 2017, the Respondent had clearly indicated that it was not intending to execute the contract.

In addition, he considered that he could no longer expect that the Respondent would respect the contract and in order to protect his career, he was forced to terminate the contract.

21. In reply to the claim, the Respondent, for its part, held that the Claimant had no just cause to terminate the contract and that he has received all payments that were due to him.

22. The Respondent referred to the preamble and art. 20 of the contract and confirmed that, on 31 January 2017, the work permit was refused for the first time since the Claimant’s salary was below the required minimum of EUR 78,400 per year. The Respondent stressed that, at that time, it was prepared to discontinue the employment relationship with the Claimant, but at the latter’s request and out of goodwill both parties agreed to sign the addendum.

23. The Respondent held that the parties’ understanding in this context was that should the work permit not be granted, the Respondent would pay the Claimant his entitlements until 28 February 2017 and the parties would discontinue their employment relationship without raising any claims towards each other. In this respect, the Respondent submitted a copy of its letter dated 1 February 2017 addressed to the alleged representative of the Claimant, which includes such statement.

24. According to the Respondent, following the country B authorities’ second refusal to issue the work permit, the Claimant informed it that he had to return to country A, which was confirmed by the Respondent in writing on 8 April 2017. The Respondent denied that it forced the Claimant to leave and highlighted that it was the Claimant who had to sort out paperwork and took it upon himself to obtain the work permit.

25. The Respondent further held that it was in contact with the Claimant by phone while he was in country A and that he was told to return to the Respondent to perform his duties should he deem that the contract and the addendum were in force.

26. The Respondent highlighted that if the contract was in force in April and May 2017, the Claimant still had obligations towards it and since he did not return to the Respondent, he was in breach of contract.

27. In addition, according to the Respondent, the Claimant was fully aware of the salary requirements in order to obtain a permit, since it was his representative who arranged the original contract and various aspects of his work permit application, and the Claimant thus entered into the contract while conscious of the risk that the work permit would be rejected.

28. Furthermore, the Respondent held that law of country B is applicable in this case and highlighted in this context that the terms of the contract are valid.

29. The Respondent further referred to art. 20 of the contract, which allegedly gave the Respondent the right to suspend the contract, since there was no work permit.

30. Referring to the understanding allegedly reached between the parties and the fact that the Respondent paid EUR 6,209 to the Claimant relating to the period ending on 28 February 2017, the Respondent deemed that the Claimant received all payments due to him.

31. In his replica, the Claimant denied that the representative referred to by the Respondent, i.e. “Mr X”, was authorised by him to represent him, highlighting that, in fact, said representative was an intermediary between the Respondent and his agent.

32. He further denied that he was aware of work permit requirements and local regulations and stressed that according to FIFA jurisprudence it is a standard obligation of a club to obtain a player’s work permit.

33. The Claimant held that he was not aware of the alleged understanding that the employment relationship would discontinue if he would not obtain the work permit until 28 February 2017. In this regard, he underlined that he never received the letter submitted by the Respondent in this regard.

34. Furthermore, the Claimant confirmed that he received a phone call from the Respondent in May 2017, during which he was not told to return to country B as alleged by the Respondent, but he was rather informed that the Respondent again had requested the work permit, which they expected not to be granted, and the Respondent offered him to terminate the contract. The Claimant pointed out that being a non-EU resident he could not have stayed in country B for a long time without work permit or visa and that he was forced to leave the country.

35. Moreover, the Claimant held the FIFA Regulations have supremacy over national law and that the FIFA Regulations stipulate that the validity of an employment contract may not be made subject to the grant of a work permit.

36. In its rejoinder, the Respondent reiterated its previous argumentation and held that the Claimant’s statement that “Mr X” was not representing him is false. In this regard, it referred to a “whatsapp” communication allegedly between the Respondent’s representative and the Claimant and between the Respondent’s representative and Mr X.

37. The Respondent further highlighted that it is not a professional club, but an amateur club playing in an amateur division.

38. Furthermore, the Respondent disagreed with the Claimant’s account of the phone conversation in May 2017 and adhered to its own account.

39. The Respondent further highlighted that the Claimant did have the opportunity to return to country B on a general visa and recalled that employing someone without work permit is prohibited by law.

40. According to the Respondent, the contract was not only conditional on receipt of a work permit, but also on the Claimant being legally capable to conclude an employment contract under law of country B. Furthermore, the salary terms of the contract were in violation of law of country B, being below the minimum threshold under the law of country B. Therefore, according to the Respondent, the contract was not valid and such invalidity applies even before considering any work permit issues.

41. The Claimant informed FIFA that, on 17 August 2017, he joined the country B club, Club Z, as an amateur where he is still registered with such status and that, thus, he has no new employment contract.

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 June 2017. Consequently, the 2017 edition of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (hereinafter: 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 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 and a club.

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 19 June 2017, the 2016 edition of the said Regulations (hereinafter: Regulations) is applicable to the matter at hand as to the substance.

4. The competence of the DRC and the applicable regulations having been established, the DRC entered into the substance of the matter. In this respect, the members of the Chamber started by acknowledging all the above-mentioned facts as well as the arguments and the documentation on file. However, the DRC 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.

5. Having said that, the members of the Chamber acknowledged that, on 19 January 2017, the Claimant and the Respondent signed the contract valid as from 21 January 2017 until 30 June 2018, in accordance with which the Claimant was entitled to receive a monthly net salary of EUR 3,000 plus EUR 600 for accommodation as well as match bonuses. It was further acknowledged that, on 24 February 2017, the parties signed an addendum to the contract by means of which the Claimant’s monthly remuneration was increased to EUR 6,550 gross with the other benefits being included therein (hereinafter together with the contract referred to as employment contract).

6. Furthermore, the Chamber took note that, on 14 June 2017, the Claimant terminated the employment contract after having put the Respondent in default of payment of his salary as of March 2017 as well as of remedying the situation surrounding his work permit. In addition, the members of the Chamber noted that by correspondence dated 16 June 2017, the Respondent contested the contents of the Claimant’s notice of termination.

7. In continuation, the members of the Chamber took into account that the Claimant lodged a claim against the Respondent maintaining that he had just cause to terminate the employment contract, since the Respondent failed to obtain his work permit and thus deprived him of the opportunity to fulfil the employment contract. In addition, the Claimant held that the Respondent acted in breach of contract by failing to remit his salary as of March 2017.

8. The Chamber noted that the Respondent, for its part, held that the Claimant had no just cause to terminate the employment contract alleging, inter alia, that he had received all payments that were due to him and that the parties had agreed that, should no work permit be granted, the employment relationship would discontinue without any claims towards each other and the Claimant would receive all monies payable to him until 28 February 2017. The Respondent further held that should the Claimant have considered the employment contract to be still in force, he still would have had obligations towards the Respondent and should have returned to it, which he did not and thus, according to the Respondent, the Claimant acted in breach of contract. The Chamber further took into account that, in its final comments, the Respondent argued that, apart from the contract being conditional upon receipt of a work permit, in application of the law of country B the employment contract was not valid.

9. On account of the above, the Chamber highlighted that the underlying issue in this dispute was first to determine as to whether the parties had entered into a valid and legally binding employment contract and subsequently, in the affirmative, to establish as to whether the employment contract had been terminated by the Claimant with or without just cause. Subsequently, the Chamber would need to determine the consequences thereof.

10. Having established the above, the members of the Chamber first turned their attention to the argument of the Respondent relating to the preamble of the contract (cf. number I./3. above) and to the law of country B, in application of which the contract allegedly was not valid. In this respect, the DRC wished to point out that when deciding a dispute before the DRC, in principle, FIFA’s regulations prevail over national law chosen by the parties, if any. In particular, the Chamber deemed that when resolving a dispute, the Regulations on the Status and Transfer of Players, general principles of law and, where existing, the Chamber’s well-established jurisprudence will apply.

11. In continuation, reverting to the Respondent’s argument that the validity of the contract was conditional upon the receipt of a work permit, the Chamber referred to art. 18 par. 4 of the Regulations and its longstanding respective jurisprudence, in accordance with which the validity of a contract may not be made subject to, inter alia, the grant of a work permit. The members of the Chamber highlighted that a club wishing to employ a player has to exercise due diligence and the validity of an employment contract cannot be made conditional upon the execution of (administrative) formalities, such as, but not limited to, the grant of a work permit which is the sole responsibility of a club and on which a player has no influence.

12. On account of these considerations, the Chamber rejected the respective argumentation of the Respondent and concluded that the Claimant and the Respondent had entered into a valid and legally binding employment contract.

13. Having said that, the Chamber turned its attention to the Respondent’s argument relating to art. 20 of the contract, which allegedly gave the Respondent the right to suspend the employment contract since no work permit was issued.

14. However, the said art. 20 stipulates that the employment contract may be suspended in case of non-issue of a work permit by the competent authorities for reasons beyond the control of the Respondent.

15. In this regard, the members of the Chamber recalled that, as alleged by the Claimant and confirmed by the Respondent, the authorities’ first refusal to issue the work permit was based on the fact that the Claimant’s salary stipulated in the contract was below the required minimum. In addition, according to the relevant letter dated 30 March 2017, the authorities’ second refusal to issue the work permit was based on the circumstance that the Respondent had proposed work to the Claimant without a work permit and the Claimant had performed work for the Respondent without having a work permit. The members of the Chamber further took into account that the Respondent apparently had not made use of the possibility to appeal such second refusal which the relevant decision referred to.

16. With regard to the grounds for the authorities to refuse the issue of a work permit for the Claimant, the members of the Chamber agreed that both refusals are based on reasons that were not beyond the control of the Respondent, i.e. the minimum contractual salary and having the Claimant perform work for it without work permit. Indeed, in its capacity of employer, the Respondent must have been aware of the required minimum contractual financial conditions for the Claimant, which is even referred to in art. 3 of the contract, and that the employee shall not perform work without having obtained the required formal work permit. In fact, the Chamber deemed that such issues are within the purview of the employer. Along these lines, the members of the Chamber highlighted that the Respondent had thus been in the position to avoid that the authorities refuse the issue of the work permit for such reasons. Having said that, the Chamber deemed unnecessary to address the parties’ statements relating to whether the Claimant was aware of work permit requirements.

17. Consequently, the Chamber agreed that the Respondent could not validly invoke art. 20 of the contract and that thus the Respondent’s respective argument must be rejected.

18. In continuation, the members of the Chamber turned their attention to the Respondent’s argument that the parties had agreed that the employment relationship would end by 28 February 2017 should the work permit not have been issued by that time, which allegation was contested by the Claimant.

19. In this regard, the Chamber took note of the correspondence dated 1 February 2017 which was addressed by the Respondent to the alleged representative of the Claimant and which appears to contain the Respondent’s statement to this effect. The members of the Chamber took into account, however, that there is no convincing documentation on file demonstrating that the Claimant agreed to such alleged termination of the employment contract by 28 February 2017. Consequently, the Chamber concluded that on the basis of the documents on file it cannot be established that the parties reached a mutual understanding or agreement that the employment contract would end if the work permit would not be issued by 28 February 2017. In this respect, the members of the Chamber wished to emphasise that with its declaration issued on 8 April 2017, the Respondent implicitly acknowledged that the Claimant was still contractually bound it, which is in contradiction with its believe that the employment contract came to an end by 28 February 2017. In addition, the members of the Chamber noted that in its correspondence dated 12 June 2017 in reply to the Claimant’s default notice, the Respondent did not raise such argument.

20. On account of the above, the Chamber decided to also reject this argument of the Respondent and determined that the employment contract remained in force beyond 28 February 2017.

21. Having established the above, the members of the Chamber considered that the Claimant was not in the position to render his services to the Respondent due to the latter’s failure to obtain the work permit in a timely manner and that the Claimant was authorised by the Respondent, on 8 April 2017, to return to country A in the context of work permit arrangements and that such authorisation was not limited in time.

22. What is more, prior to its letter dated 12 June 2017 in reply to the Claimant’s default notice of 2 June 2017, the Respondent had not contacted the Claimant in writing. In this context, referring to 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 Chamber established that neither of the parties submitted evidence of their alleged version of the contents of the phone call they had in May 2017. In addition, the Chamber took into account that the Respondent had not paid any salary to the Claimant as of March 2017.

23. On account of all of the above, in particular the fact that the Respondent failed to obtain the relevant work permit in a timely manner as a result of which the Claimant was prevented from rendering his services to the Respondent during a considerable amount of time and the Respondent’s failure to remit the Claimant’s remuneration as from March 2017, the members of the Chamber agreed that the Claimant had just cause to terminate the employment contract on 14 June 2017.

24. Having established that the Respondent is liable for the early termination of the employment contract with just cause by the Claimant, the Chamber focussed 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 compensation for the termination of the contract with just cause from the Respondent in addition to any outstanding payments on the basis of the employment contract.

25. Consequently, bearing in mind the Claimant’s claim and that in line with the foregoing considerations the Respondent had no valid reasons not to pay the Claimant’s remuneration as from March 2017 until 14 June 2017, the Chamber decided that in accordance with the general legal principle of pacta sunt servanda the Respondent is liable to pay to the Claimant the amount of EUR 22,706 in respect of the remuneration due to the Claimant in accordance with the employment contract as from 1 March 2017 until its early termination on 14 June 2017.

26. In addition, taking into consideration the Claimant’s claim pertaining to payment of 5% interest, which was not further specified, the Chamber decided to award the Claimant interest at the rate of 5% p.a. on the amount of EUR 22,706 as of the date on which the claim was lodged, i.e. 19 June 2017, until the date of effective payment.

27. In continuation, the Chamber focused its attention on the calculation of the amount of compensation for breach of contract 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.

28. In application of the relevant provision, the Chamber held that it first of all had to clarify as to whether the pertinent employment contract contains 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. Upon careful examination of the employment contract concluded between the Claimant and the Respondent, the members of the Chamber took note that art. 21 of the contract refers to a compensation payable by any party wishing to terminate the contract before expiry of the agreed term, which equals the amount of salaries owed by the expiry of the agreed term with a maximum of double the amount determined in accordance with the “Act of 24.02.1978”, no copy of which was on file. However, the members of the Chamber considered that by means of the handwritten addition to the said art. 21 (cf. last sentence under number I./6. above), which has remained undisputed by the Respondent, the parties agreed on an amount of compensation of EUR 75,000, which appears to be the basis of the Claimant’s claim for compensation for breach of contract.

29. The Chamber acknowledged that the aforementioned clause thus provides for the amount of compensation payable in the event of the early termination of the employment contract by either of the parties and that the relevant amount was not disproportionate.

30. On account of the above, the parties having contractually agreed on the compensation payable in the event of breach of contract and such compensation not being deemed disproportionate, the Dispute Resolution Chamber concluded that the provision contained under art. 21 of the contract has to be considered as valid and fully effective, i.e. the amount of compensation provided for in said article shall be awarded to the Claimant. Furthermore, for these reasons, the Chamber concurred that remuneration under any new employment is irrelevant in the case at hand.

31. Consequently, on account of all of the above-mentioned considerations and the specificities of the case at hand, the Chamber decided that the Respondent must pay the amount of EUR 75,000 as compensation for breach of contract to the Respondent.

32. In addition, taking into account the Claimant’s request as well as the constant practice of the Dispute Resolution Chamber in this regard, the Chamber decided that the Respondent must pay to the Claimant interest of 5% p.a. on the amount of compensation as of the date of receipt of the claim, i.e. 19 June 2017, until the date of effective payment.

33. The Chamber concluded its deliberations on the present matter by establishing that any further claim of 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 B, 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 22,706 plus 5% interest p.a. as from 19 June 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 75,000 plus 5% interest p.a. as from 19 June 2017 until the date of effective payment.

4. In the event that the amounts due to the Claimant, plus interest, are not paid by the Respondent within the stated time limits, 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 remittance is to be made and to notify the Dispute Resolution Chamber of every payment received.

*****

Note relating to the motivated decision (legal remedy):

According to art. 58 par. 1 of the FIFA Statutes, this decision may be appealed against before the Court of Arbitration for Sport (CAS). The statement of appeal must be sent to the CAS directly within 21 days of receipt of notification of this decision and shall contain all the elements in accordance with point 2 of the directives issued by the CAS, a copy of which we enclose hereto. Within another 10 days following the expiry of the time limit for filing the statement of appeal, the appellant shall file a brief stating the facts and legal arguments giving rise to the appeal with the CAS (cf. point 4 of the directives).

The full address and contact numbers of the CAS are the following:

Court of Arbitration for Sport

Avenue de Beaumont 2

1012 Lausanne

Switzerland

Tel: +41 21 613 50 00

Fax: +41 21 613 50 01

e-mail: info@tas-cas.org

For the Dispute Resolution Chamber:

Emilio García Silvero

Chief Legal Officer

Enclosed: CAS directives