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, 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 3 July 2017, the Player of Country B, Player A (hereinafter: the Claimant), and the Club of Country D, Club C (hereinafter: the Respondent), signed an employment contract (hereinafter: the contract), valid as from the date of the signature until 31 December 2018.

2. In accordance with art. 3.1 of the contract, the Claimant was entitled inter alia to a monthly salary in the amount of 7,350,000.

3. Furthermore, the contract does not contain a clause regarding the financial consequences in case of breach of contract by the Respondent.

4. On 10 November 2017, the Claimant duly put the club on default of payment, requesting the payment of half of the month of August 2017 and the complete months of September and October 2017, giving the Respondent a deadline until 16 November 2017, in order to remedy the default.

5. In this respect, on 17 November 2017, the Claimant sent the Respondent a letter by means of which he unilaterally terminated the contract, claiming that the Respondent still had not paid him the amounts requested in his default notice.

6. On 1 December 2017, the Claimant lodged a claim against the Respondent before FIFA, requesting the total amount of 121,275,000, broken down as follows:

 22,540,000 as outstanding salaries:

- 3,675,000 for half of the month of August 2017, plus 5% interests p.a. as from 1 September 2017;

- 7,350,000 for the month of September 2017, plus 5% interests p.a. as from 1 October 2017;

- 7,350,000 for the month of October 2017, plus 5% interests p.a. as from 1 November 2017; and

- 3,675,000 for half of the month of November 2017, plus 5% interests p.a. as from 17 November 2017.

 98,735,000 as compensation for the breach of contract, plus interest of 5% p.a. as of 1 December 2017, amount which corresponds to the residual value of the contract from 17 November 2017 until December 2018;

 The Claimant further requested sporting sanctions to be imposed on the Respondent.

7. According to the Claimant, the Respondent stopped fulfilling its payment obligations since August 2017, owing the Claimant half of his salary for the month of August and the complete salaries for the months of September 2017 and October 2017, reason why he sent a default notice to the Respondent on 10 November 2017.

8. Moreover, the Claimant deemed having just cause to terminate the contract in 17 November 2017, since his default notice remained unanswered and the Respondent failed to pay him the salaries for half of the month of August 2017, the complete months of September and October 2017, as well as half the month of November 2017.

9. In spite of having been invited to do so, the Respondent did not reply to the claim.

10. After being requested by FIFA, the Claimant confirmed that on 30 December 2017 he signed a contract with the Club of Country E, Club F, valid “for the rest of the 2017-2018 season” and for the 2018-2019 season, according to which he is entitled to receive inter alia to the payment of EUR 100,000 NET for the duration of the contract. Furthermore, the Claimant informed having signed a contract with the Club of Country B, Club G, valid as from 15 June 2018 until 14 June 2020, according to which the he is entitled inter alia to a monthly salary in the amount of 30,700.

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 1 December 2017. Consequently, the 2017 edition of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (hereinafter: the Procedural Rules) is applicable to the matter at hand (cf. art. 21 of the 2017 and 2018 editions 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 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 (editions 2016 and 2018), and considering that the present claim was lodged on 1 December 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.

5. In this respect, the Chamber recalled that the parties had signed an employment contract, valid as from 3 July 2017 until 31 December 2018, according to which the Claimant was entitled inter alia to a monthly salary in the amount of 7,350,000.

6. Furthermore, the DRC took note that after the Claimant put the Respondent on default of payment on 10 November 2017, requesting the payment of half of the month of August 2017 and the complete months of September and October 2017, the Respondent unilaterally terminated the contract in writing on 17 November 2017, arguing that the Respondent did not pay the amount requested in his default notice.

7. In continuation, the members of the Chamber noted that the Claimant lodged a claim against the Respondent, maintaining that he had terminated the employment contract with just cause on 17 November 2017, after previously having put the Respondent in default, since the latter allegedly failed to pay him the monthly salaries of half of the month of August 2017 and the complete months of September and October 2017. Consequently, the DRC observed that the Claimant asked to be awarded with his outstanding dues as well as with the payment of compensation for breach of the employment contract.

8. The Chamber further acknowledged that the Respondent, for its part, failed to present its response to the claim of the Claimant, in spite of having been invited to do so. Therefore, the DRC deemed that the Respondent had renounced to its right of defence and, thus, had de facto accepted the allegations of the Claimant.

9. As a consequence of the aforementioned consideration, the members of the Chamber concurred that, in accordance with art. 9 par. 3 of the Procedural Rules, a decision shall be taken upon the basis of the documents already on file, in other words, upon the statements and documents presented by the Claimant.

10. In line with the above, the Chamber deemed that the underlying issue in dispute was to determine whether the contract had been terminated by the Claimant on 17 November 2017, with or without just cause, and subsequently to determine the consequences thereof.

11. Having said that, the DRC concluded that it has remained uncontested that, on the date of termination of the contract by the Claimant, i.e. 17 November 2017, the Respondent had failed to pay the Claimant’s remuneration in the total amount of 18,375,000, amount which corresponds to half of the monthly salaries of half of the month of August 2017, and the complete months of September and October 2017.

12. On account of the aforementioned, the Chamber established that the Respondent, without any valid reason, failed to remit to the Claimant the substantial amount he was entitled to and had seriously neglected its contractual obligations towards the Claimant. Consequently, the members of the DRC concluded that the Respondent was found to be in breach of the contract, and that, in line with the Chamber’s longstanding jurisprudence the breach was of such seriousness that the Claimant had just cause to unilaterally terminate the employment contract on 17 November 2017 and that, as a result, the Respondent is to be held liable for the early termination of the employment contact with just cause by the Claimant.

13. 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 focused its attention on the consequences of such termination.

14. First of all, the members of the Chamber concurred that the Respondent must fulfil its obligations as per the employment contract in accordance with the general legal principle of “pacta sunt servanda”. Therefore, the DRC decided that the Respondent is liable to pay to the Claimant the remuneration that was outstanding at the time of the termination i.e. the amount of 18,375,000, corresponding to the salaries of half of the month of August 2017, and the complete months of September and October 2017.

15. Furthermore, considering the Claimant’s claim for interest and also taking into account the Chamber’s longstanding jurisprudence, the members of the DRC ruled that the Respondent must pay 5% interest p.a. on the following amounts:

 3,675,000 as from 1 September 2017;

 7,350,000 as from 1 October 217; and

 7,350,000 as from 1 November 2017.

16. Subsequently, and having established that the Respondent is to be held liable for the early termination of the contract, the Chamber further 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.

17. Having stated the above, the Chamber turned to 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.

18. 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 DRC established that no such compensation clause was included in the employment contract at the basis of the matter at stake.

19. As a consequence, the members of the DRC 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. Therefore, other objective criteria may be taken into account at the discretion of the deciding body.

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

21. Bearing in mind the foregoing as well as the claim of the Claimant, the Chamber proceeded with the calculation of the monies payable to the player under the terms of the employment contract as from its termination until 31 December 2018. Therefore, the members of the DRC concluded that the residual values of the contract in amount of 102,900,000 (i.e. salary as from November 2017 until 31 December 2018 under the contract) serves as the basis for the determination of the amount of compensation for breach of contract.

22. In continuation, the DRC 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 able 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.

23. In continuation, the Chamber remarked that the Claimant informed FIFA that following the early termination of the employment contract at the basis of the present dispute, he signed two new employment contracts. First, on 30 December 2017 with the Club of Country E, Club F, valid “for the rest of the 2017-2018 season” and for the 2018-2019 season, according to which he would be remunerated with the amount of EUR 100,000 for the duration of the contract, and secondly, on 15 June 2018, with the Club of Country B, Club G, valid a from the date of the signature until 14 June 2020, according to which the player is entitles to a monthly salary in the amount of 30,700.

24. In view of all of the above, the Chamber decided that the Respondent must pay the amount of 90,260,000 to the Claimant as compensation for breach of contract without just case, which is considered by the Chamber to be a reasonable and justified amount as compensation.

25. 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. 1 December 2017, until the date of effective payment.

26. Furthermore, the Chamber focused its attention on the further consequences of the breach of contract in question and, in this respect, addressed the question of sporting sanctions in accordance with art. 17 par. 4 of the Regulations. The cited provision stipulates inter alia that, in addition to the obligation to pay compensation, sporting sanctions shall be imposed on a club found to be in breach of contract during the protected period.

27. In this respect, the members of the Chamber referred to item 7 of the “Definitions” section of the Regulations, which stipulates, inter alia, that the protected period shall last “for three entire seasons or three years, whichever comes first, following the entry into force of a contract, where such contract is concluded prior to the 28th birthday of the professional, or two entire seasons or two years, whichever comes first, following the entry into force of a contract, where such contract is concluded after the 28th birthday of the professional”. In this respect, the Chamber took note that the breach of the employment contract by the Respondent, and the termination of the contract by the Claimant, had occurred on 17 November 2017. Therefore, the Chamber concluded that, irrespective of the Claimant’s age, such breach of contract by the Respondent had occurred within the protected period.

28. As a result, by virtue of art. 17 par. 4 of the Regulations and considering that the Claimant terminated the contract with the Respondent with just cause and, consequently, the Respondent was to be held liable for the early termination of the employment contract, the DRC decided that the Respondent shall be banned from registering any new players, either nationally or internationally, for the two next entire and consecutive registration periods following the notification of the present decision. In this regard, the Chamber emphasised that apart from the Respondent having clearly acted in breach of the contract within the protected period in the present matter, the Respondent had also on several occasions in the recent past been held liable by the Chamber for the breach of contractual relationships with, inter alia, the players, Player H (case. ref. nr. XXX; decided on 13 October 2016), Player J (case ref. nr. XXX; decided on 15 February 2018), Player K (case ref. nr. XXX; decided on 19 April 2018) and Player L (case ref. nr. XXX; decided on 24 August 2018).

29. In this regard, the members of the DRC considered important to clarify that, the registration ban for 2 registration periods imposed in the present matter will run partially concurrently with the registration ban for two registration periods imposed in case Ref. No. XXX, which is applicable until the next registration period fixed by the Football Federation of Country D (Football Federation M).

*****

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, the amount of 18,375,000 plus interest as follows:

- 5% p.a. on the amount of 3,675,000 as from 1 September 2017 until the date of effective payment;

- 5% p.a. on the amount of 7,350,000 as from 1 October 2017 until the date of effective payment; and

- 5% p.a. on the amount of 7,350,000 as from 1 November 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 90,260,000, plus 5% interest p.a. on said amount as from 1 December 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 points 2. and 3. 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 remittances are to be made and to notify the Dispute Resolution Chamber of every payment received.

7. The Respondent shall be banned from registering any new players, either nationally or internationally, for the two next entire and consecutive registration periods following the notification of the present 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

Avenue de Beaumont 2

CH-1012 Lausanne

Switzerland

Tel: +41 21 613 50 00

Fax: +41 21 613 50 01

e-mail: info@tas-cas.org

For the Dispute Resolution Chamber:

__________________________

Omar Ongaro

Football Regulatory Director

Encl. CAS directives