F.I.F.A. – Dispute Resolution Chamber / Camera di Risoluzione delle Controversie – labour disputes / controversie di lavoro (2019-2020) – fifa.com – atto non ufficiale – Decision 5 December 2019

Decision of the

Dispute Resolution Chamber

passed in Zurich, Switzerland, on 5 December 2019,

in the following composition:

Geoff Thompson (England), Chairman

Alexandra Gómez Bruinewoud (Uruguay), member

Stijn Boeykens (Belgium), member

Stefano La Porta (Italy), member

Abu Nayeem Shohag (Bangladesh), member

on the claim presented by the club,

MKS Cracovia, Poland

as Claimant

against the player,

Miroslav Covilo, Bosnia and Herzegovina

represented by Mr Kai Ludwig

as Respondent I

and the club,

FC Lugano, Switzerland

represented by Mr Luca Tettamanti

as Respondent II

regarding an employment-related dispute

arisen between the parties

I. Facts of the case

1. On 12 August 2014, the player Miroslav Covilo (hereinafter: player or Respondent I) and the Club (hereinafter: club or Claimant) signed an employment contract (hereinafter: the contract) valid as from 12 August 2014 until 30 June 2016. According to the contract, “the Player shall receive the base remuneration in the amount of EUR 7,700 gross for each month during which this agreement stays in force”.

2. On 30 April 2015, the Player and the Club concluded Annex no. 1 to the contract which provided that “this agreement shall be concluded for a specified period of time: August 12, 2014 till June 30, 2018”. According to Annex no. 1, the monthly basic remuneration of the Player increased to EUR 10,700 gross and the parties agreed that “The Player shall be entitled to the additional remuneration in the amount of EUR 24,000 gross which shall be paid no later than May 8, 2015.”

3. On 30 June 2016, the Player and the Club concluded Annex no. 2 to the contract which provided that “this agreement shall be concluded for a specified period of time: July 1st, 2016 till June 30, 2020”. According to Annex no. 2, “the Player shall be entitled to the additional remuneration in the amount of EUR 50,000 gross which shall be paid no later than August 31 2016”.

4. On 25 July 2018, the Club sent a letter to the Player releasing him from the “obligations to participate in trainings, camps and league matches of the 1st senior team of Cracovia from July 25th 2018 to August 6th 2018”.

5. On 30 July 2018, the Club authorized the Player in writing to “start contract’s negotiations with FC Lugano and proceed with the medical tests from 30.07.2018”.

6. On 8 August 2018, the Player sent a termination notice to the Club.

7. On 9 August 2018, the Player concluded an employment contract with FC Lugano (hereinafter: Lugano or Respondent II), valid as from said date until 30 June 2020. According to said contract, the Player is entitled to a sign-on fee in the amount of CHF 100,000 payable on 31 August 2018, as well as an annual salary of CHF 140,000 for the 18/19 season and CHF 240,000 for the 19/20 season.

8. On 27 August 2018, the Single Judge of the PSC passed a decision which authorized the Swiss Football Association to provisionally register the Player for Lugano with immediate effect.

9. On 28 August 2018, the Club concluded an employment contract with the player, Janusz Gol. The agreement is valid from 29 August 2018 until 30 June 2020 and entitles the player to receive a monthly remuneration of EUR 25,000.

10. On 14 November 2018, the Club lodged a claim in front of FIFA against the Player and Lugano. The Club requested that the player and Lugano be held jointly and severally liable to pay the amount of EUR 664,000 “as compensation for unilateral termination (breach) of contract” and provided the following breakdown:

 EUR 314,000 as compensation for replacement of the Player by a new player, i.e. Janusz Gol. This amount represents the difference between the total basic remuneration due to Mr Gol (EUR 25,000 per month) and the remuneration due to the Player under the Contract (EUR 10,700 per month) for the period of 22 months (1 September 2018 until 30 June 2020);

 EUR 50,000 as a return of the sign-off remuneration for prolongation of the contract resulting from Annex no. 2 to the contract;

 EUR 300,000 as an equivalent of the transfer fee which would be due to the Club in the event of a transfer of the Player to another club, calculated as half of the alleged current market value of the Player in accordance with the website transfermarkt.ch (note: evidence provided).

11. Additionally, the Club requests interest of 5% p.a. “on the total amount of compensation as of the date on which the claim was lodged, until the date of effective payment”.

12. According to the Club, since May 2018, the Player has been “conducting illegal negotiations with Lugano regarding the possibility of conclusion the employment agreement” without the Club’s consent and knowledge, thereby breaching art. 18 par. 3 RSTP. The Club claims that, during a phone call between representatives of the two clubs on 22 July 2018, the Director of Lugano “confirmed that negotiations between the Player and Lugano were undergoing since May 2018”.

13. Furthermore, the Club claims that, despite an offer for increased terms of his contract, the Player declared that he wanted to leave the Club for free, that he resigned as team captain and made “defamatory statements” regarding the Club and its employees in the media.

14. The Club explained that it authorized the player to leave until 6 August 2018 in order negotiate terms with Lugano and to undergo medical tests. At the same time, the club presented to the Player the conditions under which it would be willing to conclude a transfer with Lugano, including a EUR 50,000 transfer compensation, apologies from the player for his recent behaviour as well as a waiver for his remuneration for the month of July 2018. However, according to the club, “the negotiations between Cracovia and Lugano has not been finalized and the transfer agreement has not been concluded”.

15. According to the Club, the player did not attend its training sessions on 7 and 8 August 2018 before terminating the contract unilaterally on 8 August 2018.

16. The Club claims that none of the reasons enumerated in the termination notice of the Player can be considered as infringements or misconducts of the Club and in particular as a just cause for termination of the contract. In particular, the Club stated that it is “not true that Cracovia disclosed the details of the Contract to public”.

17. In its reply to the claim, Lugano explained that the clubs started negotiations for the player’s transfer in July 2018. According to Lugano, after having exchanged several draft agreements by email, on 31 July 2018 the clubs reached a full agreement on the terms of the player’s transfer. However, on the same day, after Lugano had already sent a signed version of the final draft agreement to the Club, the latter stated that it did not want to proceed with the transfer anymore.

18. In continuation, Lugano stated that, on 1 August 2018 and contrary to the latest email exchange of the previous day, the club’s representative exchanged text messages with Lugano’s representative regarding the method of payment of the transfer compensation. On 2 August 2018, Lugano warned the club and summoned it to implement the reached agreement. Furthermore, according to Lugano, on 3 August 2018, the club “falsely” informed the Player’s legal representative that the negotiations between the clubs had not “been officially finished” and that a deal would only be possible if the Player renounced to his July salary and apologized for his actions.

19. Lugano continued by stating that the Club had not provided any conclusive evidence in support of its allegation that negotiations between Lugano and the Player had started already in May 2018. Furthermore, Lugano sustained that the Club’s allegations are contradictory to its conduct during the negotiations about the Player’s transfer.

20. According to Lugano, the clubs had validly concluded a transfer agreement for the player’s transfer. In this respect, Lugano explained that the Club’s representative, Mr Baldys, had conducted all negotiations with Lugano and never made any reference to any authorization that would be needed from the club’s board to finalize the deal, until his email in the evening of 31 July 2018 when, according to Lugano, the clubs had already agreed on all the terms of the transfer.

21. As to the conclusion of the transfer agreement, Lugano referred to Swiss law and maintained that the Club had sent its written, full and unconditional acceptance of the offer to Lugano on 31 July 2018 (at 20:31). According to Lugano, the subsequent withdrawal (at 21:26) of the acceptance made by the Club has no legal effect under Swiss law.

22. Furthermore, Lugano stated that the mere lack of signature of a transfer agreement entails the impossibility for the clubs to comply with the TMS procedure while it does not entail that a transfer agreement does not exist at all.

23. As to the replacement costs included in the compensation claimed by the Club, Lugano held that the Club did not provide any evidence to support its allegation that the player Gol covered the same position as the Player. Moreover, Lugano pointed out that the Club did not pay a transfer fee for the player Gol as well as that it is “highly unlikely that a replacement earns more than double than the salary of the player he replaces”. Furthermore, Lugano argued that the Club saved an amount of EUR 11,900 on match bonuses that would be payable to the Player.

24. In continuation, Lugano stated that the sign-on fee of EUR 50,000 was paid to the player in 2016 in view of the prolongation of the employment contract and was not linked to any obligation of the Player to remain with the Club. Moreover, as to the claimed loss of a potential transfer fee, Lugano sustained that the amount of EUR 300,000 is speculative, especially considering the Club’s acceptance of Lugano’s offer of EUR 50,000 for the Player’s transfer.

25. Finally, Lugano held that it did not induce the Player to terminate the employment contract with the Club. In particular, Lugano stated that the termination was for reasons that occurred before it was in contact with the Player. Furthermore, Lugano pointed out that the Club authorized the Player to travel to Lugano, to negotiate terms and to undergo medical tests. In addition, unlike in other cases, Lugano entered into a transfer agreement with the Club and was ready to pay the agreed transfer fee. Moreover, Lugano argued that it did not enter into negotiations with the Player before contacting the Club, and that it concluded an employment contract with the Player only when it had already fully agreed upon the terms of the transfer with the Club. Lugano added that, “After Cracovia illegitimately refused to sign and send back the transfer agreement, FC Lugano contacted the Player and, following his autonomous and fully justified decision to terminate the contract with Cracovia and taking also into consideration the behaviour of the same Cracovia towards it, the latter decided to register the Player as a free agent”.

26. In his reply to the claim, the player started by denying several allegations made by the Club. In particular, the Player stated that his monthly remuneration under the terminated contract was EUR 9,000 net, with the Club covering all taxes. Furthermore, the Player denied that he started negotiating with Lugano in May 2018. In continuation, the Player admitted having denied certain false allegations of the club by means of a statement on Facebook on 21 July 2018, but contested having defamed the club and held that no evidence was provided in support of that allegation by the club.

27. The Player continued to explain that the club failed to comply with its obligations under the contract, in particular when it failed to pay him the taxes promised, when his family was not assisted in obtaining a residence permit, when he was obliged to play despite an injury which was not properly treated by the club and by repeatedly promising him a transfer. In view of the elements, the Player held that “any basis of trust was completely destroyed”, especially after having been informed by Lugano that an agreement on the transfer was reached by the club, and that he could not be expected to return to the club on 7 August 2018.

28. Furthermore, the Player explained that his legal representative sent several emails to the club on 2, 4 and 5 August 2018, opposing to the presentation of the facts made by the club, offering to waive half of his July salary in order to find an amicable solution in order to finalize his transfer and reserving his right to terminate the contract if the blackmailing by the Club continued.

29. As a consequence of the foregoing and with reference to DRC jurisprudence as well as Swiss law, the Player held that he had a just cause to terminate the employment contract on 8 August 2018. The Player added that the club endangered his health and violated his personality rights by publicly harassing him. Moreover, the player argued that the club contradicted its own behaviour by creating the legitimate expectation towards the Player and Lugano that a transfer would be concluded.

30. As to the amount of compensation claimed, the player stated that the club should have replaced the player in any event if the latter had agreed to the conditions for his transfer to Lugano and, therefore, the club did not suffer any damage when it contracted a new player.

31. Finally, the Player requested the claim to be rejected or eventually to partially uphold it and to order the Respondents to pay the Club compensation in the amount of EUR 50,000 without interest.

32. In its replica, the club insisted that the transfer agreement was never signed by all parties and, consequently, no valid transfer was concluded. Furthermore, with regard to the negotiations between Lugano and the Player that started in May 2018, the Club submitted audio recordings of the phone conversation between representatives of the clubs. In this respect, the Club argued that recordings of phone conversations are permitted under Polish law.

33. With regard to the alleged tax issues raised by the Player, the Club pointed out that the contract clearly provides for a gross salary and that the Player has always been responsible for the payment of taxes during the employment relationship with the Club. Furthermore, the Club stated that it has assisted the Player in obtaining residence permits for his family and provided documentation in this regard. In addition, the Club stated that it has provided the Player with the necessary medical care after he sustained a head injury in February 2017 and that it covered all related costs.

34. Finally, the club reiterated its position as well as its request for relief.

35. In its final comments, Lugano referred to the audio recording submitted by the club and held that such evidence is inadmissible under Swiss law, considering the lack of consent of Mr Manna for the recording and for the submission in the present proceedings, and only shows the bad faith of the club. Moreover, Lugano argued that the content of the phone recording is irrelevant considering that, even if Lugano was in contact with the Player in May 2018 which it denies, the club subsequently continued to carry out negotiations with Lugano, without making any complaint about the alleged negotiations with the Player, and authorized the player to do the same, which eventually resulted in the agreement on the player’s transfer.

36. Finally, Lugano reiterated its position and requested the claim to be rejected.

37. In his final comments, the player argued that a valid transfer agreement had been concluded between the clubs based on the principle of offer and acceptance under Swiss law.

38. Furthermore, the Player referred to the audio recordings as being illegal, and stated that nothing what was said during the relevant phone call suggests that contract negotiations had taken place between Lugano and the Player in May 2018.

39. In continuation, the player stated that the club had only assisted him and his family in obtaining tourist visas rather than residence permits, and maintained that he had forwarded the bills for medical treatment to the club but ultimately had to pay them himself.

40. Finally, the Player referred to the arguments put forward in his reply to the claim and reiterated his request for the claim to be dismissed or, alternatively, only partially upheld.

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 14 December 2018. Consequently, the Rules governing the procedures of the Players’ Status Committee and the Dispute Resolution Chamber (edition 2018; hereinafter: Procedural Rules) are applicable to the matter at hand (cf. art. 21 of the Procedural Rules).

2. Subsequently, the members of the Chamber referred to art. 3 par. 1 of the Procedural Rules and confirmed that in accordance with art. 24 par. 1 and par. 2 in combination with art. 22 lit. b of the Regulations on the Status and Transfer of Players (edition October 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 Polish club, a Bosnian player and a Swiss club.

3. Furthermore, the DRC analysed which regulations should be applicable as to the substance of the matter. In this respect, he confirmed that in accordance with art. 26 par. 1 and par. 2 of the Regulations on the Status and Transfer of Players (edition October 2019), and considering that the present claim was lodged on 14 December 2018, the June 2018 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 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 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 he considered pertinent for the assessment of the matter at hand.

5. Having said that, the members of the Chamber acknowledged that, on 12 August 2014, the Claimant and the Respondent signed an employment contract, valid as from 12 August 2014 until 30 June 2016.

6. Furthermore, the DRC noted that on 25 July 2018, the player was authorized by the Claimant to travel to Lugano in order to negotiate terms of a potential employment contract and to undergo a medical examination. According to the Claimant, the negotiations between the clubs about the possible transfer of the player were not finalized and a transfer agreement was not concluded. Consequently, the Claimant held that the player terminated the contract on 8 August 2018 without just cause.

7. Subsequently, the Chamber took notice of the argumentation of Lugano and the player, according to which the clubs reached an agreement on the terms of the player’s transfer through an exchange of emails on 31 July 2018, by means of which the Claimant accepted the offer made by Lugano. Lugano argued that the subsequent withdrawal of the acceptance by the Claimant has no legal effect.

8. In light of the above, the DRC observed that the pivotal issue in this dispute, considering the diverging position of the Claimant and the two Respondents, was to determine as to whether the clubs had indeed validly agreed upon the terms of the player’s transfer and the second issue is whether the player had a just cause to terminate the contract with the Claimant on 8 August 2018.

9. With the above in mind, 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.

10. Having stated the above, the DRC started to examine the circumstances of the transfer negotiations between the Claimant and Respondent II and wished to emphasise that it appears that the Claimant had accepted the final terms offered by Respondent II, after having requested amendments as to the payment dates of the transfer fee.

11. In this respect, the Chamber turned its attention to the Claimant’s email to Lugano on 31 July 2018, which inter alia reads as follows: “we are able to accept following but under condition that we do not make any amendments to final version of the transfer agreement that we sent (except payment dates)”. In the DRC’s opinion this email can be considered as the acceptance of Lugano’s offer. Subsequently, the Claimant changed its mind, but only after the Respondent II proceeded to send the final transfer agreement.

12. Moreover, the DRC turned its attention to the player’s position and noted that he was informed by Lugano that the clubs had agreed on the terms of the transfer. On 3 August 2018, the Claimant requested further conditions for the transfer to go through, expecting the player to apologize publicly for his behaviour as well as to waive his July salary. The members of the Chamber noted that the player then sent several emails to the club trying to settle the matter at hand in an amicable way, until he finally decided to terminate the contract.

13. Considering all documents on file, the Chamber concluded that the clubs had indeed agreed on the terms of the transfer, and consequently, the player could rely in good faith that the transfer agreement between the Claimant and the Respondent II was concluded on 31 July 2018 as a result of which he terminated the contract with just cause on 8 August 2018.

14. Therefore, the Chamber concluded that the Claimant failed to submit corroborating evidence that the transfer agreement between the clubs was not yet finalized and subsequently, the Claimant’s arguments have to be rejected.

15. All the above led the DRC to conclude that the claim of the Claimant has to be rejected.

III. Decision of the Dispute Resolution Chamber

The claim of the Claimant, MKS Cracovia, is rejected.

*****

Note related to the publication:

The FIFA administration may publish decisions issued by the Players’ Status Committee or the DRC. Where such decisions contain confidential information, FIFA may decide, at the request of a party within five days of the notification of the motivated decision, to publish an anonymised or a redacted version (cf. article 20 of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber).

Note related to the appeal procedure:

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. 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