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 14 June 2019

Decision of the

Dispute Resolution Chamber

passed in Zurich, Switzerland, on 14 June 2019,

in the following composition:

on the matter between the player,

Player A, Country B

as Claimant / Counter-Respondent

and the club,

Club C, Country D

as Respondent / Counter-Claimant

and the club,

Club E, Country B

as second Counter-Respondent

regarding an employment-related dispute

arisen between the parties

I. Facts of the case

1. On 11 June 2015, the Player of Country B, Player A (hereinafter; the player or the Claimant/Counter-Respondent) and the Club of country D, Club C (hereinafter; the club or the Respondent/Counter-Claimant) entered into an employment contract valid as of the date of signature until 15 June 2018.

2. The contract provided for a salary payable to the player in the total amount of EUR 12,000,000 broken down as follows:

- EUR 4,500,012 as “advance payment” payable in three equal instalments of EUR 1,500,004 on 30 August of 2015, 2016 and 2017 respectively;

- EUR 208,333 as monthly salary payable at the end of the month from “July 2015 through June 2018”.

3. Art. 5.2 of the contract stipulates certain bonuses to which the player was entitled, in particular, the following:

- If the player participates “in over 50% of the matches of the Tournament X on the then current season, in the event Club C becomes the winner…” the player was entitled to USD 200,000 payable on 30 June of “the then current year” provided that, at that point, the player is “employed by Club C”;

- If the player participates “in over 80% of Club C’s official matches of the Country D Sports Season 2015/2016, Club C shall, on 30 July 2016, pay to the player a one-time bonus of EUR 200,000”. The same conditional bonus applied for the seasons 2016/2017 and 2017/2018, however increased to EUR 300,000 for the former (payable on 30 July 2017) and to EUR 400,000 for the latter (payable on 30 June 2018).

4. Furthermore, art. 5.4 stipulated that the club “will provide reasonable suitable furnished” accommodation to the player.

5. According to art. 11.2 of the contract, both parties were entitled to terminate the contract “upon 15 days-notice in writing for just cause according with the FIFA Regulations”.

6. Pursuant to art. 11.5 “…the Parties hereby expressly and irrevocably agree that in the event that Club C terminates this contract with just cause (…) and/or the player terminates this contract without just cause (…), the player shall promptly pay to Club C, as compensation for the breach, the amount of EUR 9,000,000”. Furthermore, art. 11.6 reads: “In the event that Club C terminates this contract without just cause (…) Club C shall be liable to pay to the player, as full and final breach of contract compensation, the remaining value of the contract”.

7. Art. 13.1 provides that “Any notice given by any of the parties hereto shall be sufficient only if in writing and delivered in person, by facsimile or through courier with acknowledgement of delivery to the address of the recipient”.

8. On 22 March 2016, the player addressed a letter to the club explaining that the day before he was asked to sign a confirmation letter in which it was stated that the club owed him the amount of EUR 750,002 as part of the advance payment due on 30 August 2015 (“the first advance payment”), which was going to be paid on 1 August 2016.

9. The player further claimed in said letter that the confirmation had been signed “under duress” “in the locker room”. As such, the player put the club in default of payment of the outstanding part of the first advance payment, as well as his salaries for the months of January and February 2016 in the amount of EUR 208,333 each.

10. On the same date, the club replied arguing that the salary of January 2016 had been already paid, that the one of February was “under process” and that the part of the first advance payment “will be paid as per the confirmation letter”.

11. A further letter was sent by the player on the same date acknowledging receipt of the payment of his January 2016 salary.

12. On 3 June 2016, the player sent a second default notice to the club alleging that, in addition to part of the first advance payment, his salaries for the months of March, April and May 2016 were outstanding. The player gave the club a deadline until 9 June 2016 to remedy the default.

13. On 6 September 2016, a third default notice was sent. In this letter, the player requested the payment of part of the first advance payment, the entire advance payment due on 30 August 2016 ("the second advance payment”) as well as certain bonuses provided in art. 5.2 of the contract; all for a total amount of EUR 2,450,004 and USD 200,000. A further letter was sent by the player on 16 December 2016 granting the club 10 days to cure the default.

14. On 2 January 2017, the player notified the club of his decision to terminate the contract allegedly with just cause. The player based the termination on the amount that was outstanding at that point, namely, EUR 3,168,004 and USD 200,000 comprised of (part of) the first advance payment, the second advance payment, his salaries for the months of October, November and December 2016, bonuses and “housing costs”.

15. On 17 February 2017, the player lodged a claim in front FIFA against the club maintaining that the club shall be held liable for the early termination of the contract and requested payment of the following monies:

- EUR 750,002 corresponding to half of the first advance payment;

- EUR 1,500,004 corresponding to the second advance payment;

- EUR 624,999 corresponding to the salaries as of October until December 2016;

- EUR 200,000 as bonus related to match appearances during the 2015/2016 season;

- USD 200,000 as bonus related to the victory of the Tournament X in 2016;

- EUR 95,430 as reimbursement of accommodation costs;

- EUR 9,000,000 as compensation for breach of contract as per art. 11.5 and 11.6 of the contract or alternatively EUR 5,249,994 as compensation corresponding to the residual value of the contract.

In addition, the player requested 5% interest p.a. as of the respective due dates on the outstanding remuneration.

16. In his claim, the player maintained that he terminated the contract with just cause due to the club’s nonfulfillment of its financial obligations. In this context, the player pointed out that the amount of EUR 3,302,437 remained outstanding. The player underlined that said amount corresponds to “almost ten monthly salaries”.

17. Furthermore, the player held that he put the club in default and granted it 17 days to remit the outstanding receivables before terminating the contract.

18. In support of his claim regarding the reimbursement of the accommodation costs in the total amount of EUR 95,430, the player submitted a “Tenancy Agreement” dated 25 February 2016, according to which the player needed to pay the total amount of 375,000 (approx. EUR 93,000) for the period of 12 months. In this context, and in connection with art. 5.4 of the contract, the player held that the club failed to pay his rent although he was contractually entitled to such reimbursement.

19. The player also referred to art. 11.5 and 11.6 of the contract and requested compensation for breach of contract in the total amount of EUR 9,000,000, as he deems that art. 11.5 of the contract shall be applied reciprocally.

20. In the alternative, the player requested compensation in the amount of EUR 5,249,994 corresponding to the residual value of the contract.

21. In its reply, the club rejected the player’s claim and requested the payment of compensation for breach of contract in the amount of EUR 9,000,000.

22. Furthermore, the club requested that the Club of Country B, Club E (hereinafter; Club E) shall be held jointly and severally liable for the payment of compensation and that sporting sanctions shall be imposed on the player as well as on Club E.

23. In particular, the club held that the player terminated the contract without just cause by signing a contract with Club E, alleging that all the notifications sent by the player, including the termination of the contract, were “irregular” and therefore “null and void”.

24. In particular, the club argued that the player’s notifications were not in accordance with the formal requirements of art. 13.1 of the contract. Moreover, the club maintained that the player did not comply with art. 11.2 of the contract as he only gave a 10 instead of a 15 days’ notice.

25. Alternatively, in case the DRC would decide that the notices sent by the player were in line with the contract, the club argued that the player had no just cause to terminate since the player failed to “produce any evidences that late payments could severely endanger his position and existence”.

26. In this regard, the club acknowledged a debt towards the player in the amount of EUR 1,983,095, but insisted on being late 5 months only and not 1.5 years as argued by the player. What is more, according to the club, the second advance payment should not be considered as being due on a specific date but rather it is to be understood as an advance payment payable throughout the second year of the contract.

27. The club further argued that the player terminated the contract in bad faith, since the club “has done everything to find solutions” during the Christmas holidays in order to avoid a termination and that a meeting with the player’s agent was scheduled for 2 January 2017. Instead, the player decided to terminate the contract and to sign a new contract with Club E.

28. “Very alternatively”, in case the DRC concludes that the player had just cause to terminate the contract, the club requested to reduce the compensation claimed by the player. In this regard, the club held that there is no provision in the contract defining the compensation for the player in case of a breach by the club.

29. In this context, the club requested to reject the player’s claim for compensation in the amount EUR 9,000,000 and to deduct the remuneration he earned according to the new contract.

30. In his reply to the counterclaim, the player first highlighted that the club acknowledged owing him half of the advance payment due on 1 August 2015, the salaries as of October until December 2016, the bonus related to match appearances during the 2015/2016 season as well as the bonus related to the victory of the Tournament X in 2016. As such, the player considered that the counterclaim lodged by the club is completely illegitimate and should thus be dismissed.

31. Furthermore, the player emphasised that the club did not challenge having received his default notices and replied to some of them. Therefore, the allegation that the default notices are to be disregarded is without merit.

32. Finally, the player reiterated all the arguments of his reply.

33. In its reply to the counterclaim, Club E stressed that “it is beyond any doubt that the club failed to pay the player a substantial amount…”. Club E emphasised that the club recognised owing “more than 49.5% of the total remuneration due to the player” in accordance with the contract.

34. As to the termination of the contract, Club E emphasised that the player gave the club a de facto deadline of 17 days.

35. On account of the above, Club E requested the rejection of the counterclaim

36. Upon request, the player informed FIFA that his contract with Club E was valid as of 5 January 2017 until 31 December 2019 and that he was entitled to a monthly salary of 300,000 until December 2017 (approx. EUR 88,000) and as of January 2018 of 395,000 (approx. EUR 120,000).

II. Considerations of the Dispute Resolution Chamber

1. First, the Dispute Resolution Chamber (hereinafter also referred to as the DRC or the Chamber) analysed whether it was competent to deal with the matter at stake. In this respect, it took note that the present matter was submitted to FIFA on 17 February 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 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 (editions 2016, 2018 and 2019), 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, a Club of Country D and a Club of Country B.

3. In this respect, the Chamber was eager to emphasize that contrary to the information contained in FIFA’s letter dated 7 June 2019, sent on 12 June 2019, by means of which the parties were informed of the updated composition of the Chamber, the members Johan van Galen and Stefano La Porta refrained from participating in the deliberations in the case at hand, as the member Johan van Galen was unable to attend the meeting due to certain personal circumstances. In order to comply with the prerequisite of equal representation of club and player representatives, also the member Stefano La Porta refrained from participating in the meeting and thus the Dispute Resolution Chamber adjudicated the case in presence of three members in accordance with art. 24 par. 2 of the Regulations.

4. In continuation, the Chamber analysed which edition of the Regulations on the Status and Transfer of Players 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 (editions 2016, 2018 and 2019), and considering that the Claimant’s claim was lodged on 17 February 2017, the 2016 edition of the aforementioned regulations (hereinafter; the Regulations) is applicable to the matter at hand as to the substance.

5. The competence of the Chamber and the applicable regulations having been established, and entering into the substance of the matter, the Chamber started by acknowledging the above-mentioned facts as well as the documentation contained in the file. 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.

6. In so doing, the members of the Chamber first noted that on 11 June 2015 the player and the club concluded an employment contract valid as from the date of signature until 15 June 2018.

7. Subsequently, the Chamber acknowledged that the contract was terminated by the player in writing on 2 January 2017.

8. The members of the Chamber then took note of the player’s claim who argues having terminated the contract with just cause on 2 January 2017. In particular, the player claims that in spite of his default notices, on the date of termination the club owed him the total amount of EUR 3,170,435 and USD 200,000 as outstanding remuneration, corresponding to half of the first advance payment, the entire second advance payment, his salaries as of October until December 2016, bonuses related to match appearances during the 2015/2016 season and to the victory of the Tournament X in 2016, as well as the reimbursement of accommodation costs. Thus, in addition to his outstanding remuneration, the player claims from the club the payment of compensation for breach of contract.

9. The members of the Chamber equally took note of the argumentation of the club, which acknowledged owing most of the amounts requested by the player, while explicitly objecting to the payment of the second advance payment, which it deems to be payable not on a specific date but throughout the duration of the contract. In spite of acknowledging a great part of the debt, the clubs deems that the player terminated the contract without just cause, as the default notices were not made in accordance with clauses 11.2 and 13.1 of the contract and must therefore be disregarded. Finally, the club lodged a counterclaim against the player and his new club, Club E, for breach of contract without just cause and inducement to breach, respectively, claiming from both parties the payment of compensation.

10. Finally, the Chamber took note of Club E’s position, which deems that the player terminated the contract with just cause, pointing out specifically that the club acknowledged owing “more than 49.5% of the total remuneration due to the player” and that the termination was made in accordance with the terms of the contract.

11. On account of all the above, the Chamber highlighted that the underlying dispute in the present matter was to determine whether the employment contract had been prematurely terminated with or without just cause by the player. In so doing, 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.

12. The members of the Chamber equally deemed appropriate to remark the general principle that contracts ought to be respected, as otherwise, consequences have to be assumed by the relevant party. Further, the DRC took into consideration the content of art. 14 of the Regulations, which provides that “a contract may be terminated by either party without consequences of any kind (either payment of compensation or imposition of sporting sanctions) where there is just cause”.

13. The Chamber stressed that the definition of just cause and whether just cause exists shall be established in accordance with the merits of each particular case.

14. Furthermore, the Chamber recalled its longstanding and well established jurisprudence which indicates that only a breach or misconduct which is of a certain severity justifies the termination of a contract. In other words, only when there are objective criteria which do not reasonably permit to expect a continuation of the employment relationship between the parties, a contract may be terminated prematurely. A premature termination of an employment contract can only ever be an ultima ratio measure.

15. With the above-mentioned principles in mind, the Chamber first stressed that the club acknowledges owing the player outstanding remuneration in the amount of EUR 1,983,095, however it deems that the termination of the contract and the default notices have to be disregarded as they were not made in accordance with clauses 11.2 and 13.1 of the contract. At this point, the DRC deemed it appropriate to refer to the content of the aforementioned clauses. According to art. 11.2 of the contract, both parties were entitled to terminate the contract “upon 15 days-notice in writing for just cause according with the FIFA Regulations”. Art. 13.1 provides that “Any notice given by any of the parties hereto shall be sufficient only if in writing and delivered in person, by facsimile or through courier with acknowledgement of delivery to the address of the recipient”.

16. With that in mind, the Chamber noted that the ratio behind the formal requirements outlined in the aforementioned clauses was to ensure that any of the parties was effectively made aware of possible violations of their contractual obligations and given the opportunity to, in a reasonable period of time, remedy the default and preserve the employment relationship. In this respect, the Chamber pointed out that it is undisputed that the default notices of the player – as well as the termination – have been received by the club, which even replied to some of them. Furthermore, a considerable amount of remuneration has remained outstanding for several months, given that the first default notice was issued on 22 March 2016 and that the contract was terminated by the player on 2 January 2017. Considering that the club had a reasonable time and opportunity to remedy its default and pay the explicitly acknowledged outstanding remuneration, it is evident that the club’s argument regarding the formal non-compliance of the default notices with the contract must be disregarded.

17. As to the club’s objection to pay the player the second advance payment, the Chamber deemed it appropriate to refer the parties to the wording of the contract, which clearly stipulates a specific pay date for said amount, i.e. 30 August 2016. Thus, it is clear that the second advance payment has a specific due date and therefore was entirely due on that date. As such, the argument of the club that the second advance payment was to be paid throughout the duration of the contract is without merit and cannot be upheld.

18. Consequently, it can be established that at the time of the termination a considerable amount of remuneration – consisting of at least the undisputed part of the first advance payment and the player’s monthly salaries for October to December 2016, as well as of the second advance payment, which the Chamber just concluded was equally due – was outstanding for a significant period of time and that the club was therefore in material breach of the contract. As such, the DRC concluded that the player had just cause to terminate the contract on 2 January 2017, due to the club’s unjustified breach.

19. Prior to establishing the consequences of the breach of contract without just cause by the club in accordance with art. 17 par. 1 of the Regulations, the Chamber held that it had to address the issue of the unpaid remuneration at the moment the contract was terminated by the player and establish its exact amount and composition.

20. In this respect, the Chamber recalled that part of the first advance payment in the amount of EUR 750,002, the entire second advance payment in the amount of EUR 1,500,004 as well as the player’s monthly salaries for October until December 2016 in the total amount of EUR 624,999 clearly remained outstanding by the time the contract was terminated.

21. In addition, the Chamber noted that also the amounts of EUR 200,000 as bonus related to match appearances during the 2015/2016 season and USD 200,000 as bonus related to the victory of the Tournament X in 2016, were to be added to the amount of outstanding remuneration, as not only the club explicitly acknowledged these debts, but also the player provided substantial evidence of the fulfilment of their conditions precedent.

22. As to the EUR 95,430 claimed by the player as reimbursement of accommodation costs, the Chamber deemed that such request must be rejected, as the relevant contract does not contain a specific amount due by the club to the player as accommodation costs and the player failed to prove that the club agreed to reimburse the amounts as per the tenancy agreement presented.

23. Therefore, in accordance with the general legal principle of “pacta sunt servanda”, the Chamber concluded that the club has to pay to the player the total amounts of EUR 3,075,005 and USD 200,000 plus 5% interest p.a. over the aforementioned amounts as from the respective due dates, considering the request of the player as well as the DRC’s well-established jurisprudence.

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

25. The Chamber turned to the calculation of the amount of compensation payable to the player by the club 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 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.

26. In application of the relevant provision, the Chamber held that first of all, it 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.

27. In this regard, the Chamber recapped that pursuant to art. 11.5 “…the Parties hereby expressly and irrevocably agree that in the event that Club C terminates this contract with just cause (…) and/or the player terminates this contract without just cause (…), the player shall promptly pay to Club C, as compensation for the breach, the amount of EUR 9,000,000”. Furthermore, art. 11.6 stipulated that “In the event that Club C terminates this contract without just cause (…) Club C shall be liable to pay to the player, as full and final breach of contract compensation, the remaining value of the contract”.

28. From the aforementioned, the members of the Chamber noted that clause 11.6 of the contract constitutes a liquidated-damage clause in favour of the player. The Chamber also pointed out that the contract also contains a clause in favour of the club, establishing the amount of compensation due to it in case of an unjustified breach by the player. When analysing the consequences of the application of the clauses, the DRC concluded that the principles of parity and equal repartition of rights are met and, as such, clause 11.6 should be applied to establish the amount of compensation due by the club to the player.

29. The relevant clause provides that the player should be entitled to receive the remaining value of the contract, which corresponds to EUR 5,249,998. This amount comprises the advance payment for the year 2017 as well as 18 monthly salaries corresponding to the month of January 2017 until June 2018. No interest was requested by the player over the amount of compensation.

30. The members of the Chamber concluded their deliberations by partially accepting the claim of the player and fully rejecting the counterclaim of the club.

***

III. Decision of the Dispute Resolution Chamber

1. The claim of the Claimant/Counter-Respondent, Player A, is partially accepted.

2. The Respondent/Counter-Claimant, Club C, is ordered to pay to the Claimant/Counter-Respondent, within 30 days as from the date of notification of this decision, outstanding remuneration in the amounts of EUR 3,075,005 and USD 200,000 plus 5% interest as follows:

a. 5% interest p.a. on the amount of USD 200,000 as of 1 July 2016 until the date of effective payment;

b. 5% interest p.a. on the amount of EUR 200,000 as of 1 August 2016 until the date of effective payment;

c. 5% interest p.a. on the amount of EUR 750,002 as of 2 August 2016 until the date of effective payment;

d. 5% interest p.a. on the amount of EUR 1,500,004 as of 1 September 2016 until the date of effective payment;

e. 5% interest p.a. on the amount of EUR 208,333 as of 1 November 2016 until the date of effective payment;

f. 5% interest p.a. on the amount of EUR 208,333 as of 1 December 2016 until the date of effective payment;

g. 5% interest p.a. on the amount of EUR 208,333 as of 1 January 2017 until the date of effective payment.

3. In the event that the amount plus interest due to the Claimant/Counter-Respondent in accordance with number 2. above is not paid within the stated time limit, the present matter shall be submitted, upon request, to the FIFA Disciplinary Committee for consideration and a formal decision.

4. The Respondent/Counter-Claimant is ordered to pay to the Claimant/Counter-Respondent, within 30 days as from the date of notification of this decision, compensation for breach of contract in the amount of EUR 5,249,998.

5. In the event that the amount due to the Claimant/Counter-Respondent in accordance with number 4. above is not paid within the stated time limit, interest at the rate of 5% p.a. will fall due as of expiry of the aforementioned time limit and the present matter shall be submitted, upon request, to the FIFA Disciplinary Committee for consideration and a formal decision.

6. Any further claim lodged by the Claimant/Counter-Respondent is rejected.

7. The counterclaim of the Respondent/Counter-Claimant is rejected.

8. The Claimant/Counter-Respondent is directed to inform the Respondent/Counter-Claimant and the second 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 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 & Compliance Officer

Encl.: CAS directives