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 27 February 2020

Decision of the

Dispute Resolution Chamber

passed in Zurich, Switzerland, on 27 February 2020,

in the following composition:

Clifford Hendel (USA), Deputy Chairman (did not take part in the deliberations)

Roy Vermeer (The Netherlands), member

Stefano La Porta (Italy), member

on the claim presented by the player,

Vincenzo Rennella, France,

represented by Ms Yanina Miculitzki

as Claimant

against the club,

Miami FC, USA

as Respondent

regarding an employment-related dispute between the parties

I. Facts of the case

1. On 1 February 2017, the French player Vincenzo Rennella (hereinafter: the player or the Claimant) and the North-American club Miami FC (hereinafter: the club or the Respondent) concluded an employment contract (hereinafter: the contract) named “North American Soccer League Standard Contract for Professional Players (2017)” valid as of the same date until 31 December 2021. At the time the contract was executed, the club was playing in the North American Soccer League (NASL) (hereinafter: the League).

2. As specified in Addendum B of the contract, the club undertook to pay the player a fixed remuneration of USD 800,000 for each calendar year, and a monthly housing allowance of USD 3,000.

3. The note to the contract provides that “For the purposes of the contract, the term “League” shall mean the North American Soccer League LLC”.

4. Pursuant to art. 2 of the contract, the club “committed to pay the player the compensation described in Addendum B during the season pursuant to the payment schedule specified in Addendum B. For purposed of this contract, “season” shall mean the period which commences on the date of the Club’s first match in each annual League competition period and concludes on the day that is the Club’s final game during each annual League competition period”.

5. Art. 12, lit. b) of the contract stipulates the following: “Club may terminate the contract between any seasons at any time after the day of Club’s last game in a season (regular season or playoff) and Club’s first game of the following season. Player acknowledges that part of the compensation paid to Player is in consideration for this right to terminate this Contract”.

6. In accordance with art. 13 of the contract, the club and the player agreed that all disputes relating to or arising out of the contract, or player’s relationship with the club or the League including, but not limited, to disputes related to compensation, benefits, discipline, or the termination of the contract, would be presented to the commissioner of the League for final resolution by the League. The same article further provided for a specific appeal procedure.

7. On 29 May 2018, the Respondent gave notice to the player the termination of the loan of agreement and, by means of a separated letter, the termination of the contract pursuant to its art. 12 lit. b). In particular, the club informed the player that it had been “left no other alternative than to exercise its right to terminate the contract under 12(b)” due to the United States Soccer Federation (hereinafter:

USSF) decision to not sanction League after the 2017 season, which “resulted in the cancellation of the 2018 NASL season and potentially future NASL seasons”.

8. On 1 June 2018, the player reacted in writing to the club’s unilateral termination arguing that clause 12(b) had a potestative character and, therefore, that said termination was null and void.

9. On 8 June 2018, the Claimant put the Respondent in default for the payment of compensation for breach of contract in the amount of USD 3,295,000, granting a 10 days’ deadline for the club to cure its alleged breach.

10. On 23 June 2018, the player signed a new employment contract with the Spanish club Extremadura UD, valid as of the same date and until 30 June 2019 and providing a salary of EUR 88,000, payable in 11 monthly salaries of EUR 8,000 each, and a sign-on fee of EUR 112,000. This contract was mutually terminated on 29 January 2019.

11. On 10 February 2019, the player signed an employment contract with the Spanish club Cádiz CF, valid as of the same date until 30 June 2019, providing a total salary of EUR 50,000, payable in 5 monthly salaries of EUR 10,000 each.

12. On 24 July 2019, the player signed an employment contract with the Greek club Xanthi FC, valid as from the same date until 30 June 2020, providing a total remuneration of EUR 131,950.

13. The Claimant filed a claim against the Respondent before FIFA and considered that the Respondent terminated the contract without just cause. The Claimant requested compensation for breach of contract in the total amount of USD 3,303,523.06, broken-down as follows:

- USD 466,000 for salaries related to the period June-December 2018;

- USD 2,400,000 for salaries of seasons 2019-2020-2021;

- USD 300,000 for loss of chance in respect of bonuses stipulated in the contract for the period 2018-2021;

- USD 129,000 for the residual housing allowance;

- USD 7,800 as expenses related to anticipated termination, corresponding to the deposit of the player’s lease agreement for an apartment;

- USD 723.06 as return flight ticket.

14. The Respondent, for its part, rejected the player’s claim. The Respondent contested FIFA’s jurisdiction on the basis of art. 13 of the contract, pointing out that the Claimant did not pursue any of the dispute resolution procedures set out therein.

15. As to the substance, the Respondent affirmed that, on 1 September 2017, “the NASL failed to secure sanctioning by the USSF for 2018 and effectively was no longer a member of the USSF”. In this respect, the Respondent provided copy of a letter sent by the USSF to the NASL on 1 September 2017, whereby the latter was informed that the Board of the USSF “voted not to approve the application of the North American Soccer League (“NASL”) for 2018 Division II Men’s Outdoor League status”.

16. Moreover, the Respondent submitted a copy of a statement published on the NASL official website on 27 February 2018, stating, inter alia, that the League’s season of 2018 was “no longer a possibility” and that the League and its affiliate clubs would “look at all avenues to return to the field for the 2019 season”. Such statement further read that “during the NASL’s hiatus from competition, three NASL members, the Jacksonville Armada FC, Miami FC, an New York Cosmos, will be fielding teams in the National Premier Soccer League with play scheduled to begin on April 15, 2018”.

17. The Respondent further argued that art. 12 b) of the contract was a valid clause under Florida and United States contract law and maintained that it had been explicitly agreed by both parties. Moreover, the Respondent alleged that, on 30 May 2018, it reached a verbal agreement with the player for the termination of the contract, against payment of USD 83,000.02. In this respect, on 1 June 2018, the Respondent sent a draft of termination agreement reflecting such agreement to the player’s intermediary via e-mail.

18. Furthermore, the Respondent affirmed that it paid “two thirds” of the amount stated in the termination agreement, payment which it did not eventually complete due to the player’s correspondence of 8 June 2018. However, the Respondent alleged that the Claimant accepted such a partial payment.

19. Finally, the Respondent argued that the player’s conclusion of a new employment contract with the club Extremadura UD “was acceptance of the terms of the Mutual Termination Agreement as a contract implied in fact”.

20. The Respondent stressed that the fact that USSF did not sanction the League, and consequently the cancellation of the 2018 League season on 27 February 2018, and potentially future seasons, were not difficulties which the Respondent could have reasonably foreseen. In other words, according to the Respondent, the performance of the contract was made impossible due to frustration of the purpose for which the agreement was bargained.

21. Lastly, the Respondent stated, as of 1 January 2018, it was not affiliated with a league sanctioned by the USSF.

22. In its replica, the Claimant insisted on FIFA’s jurisdiction. As to the substance, the Claimant reiterated his initial requests and considered that the contract did not provide that it might be affected by the relationship between the Respondent and the League.

23. In addition, the player did not contest that the intermediary contacted by the club was his representative but, rather, that there was no evidence that said intermediary accepted the club’s proposal of termination agreement. What is more, the Claimant averred that the aforementioned intermediary did not have the power to sign any agreement on his behalf.

24. Moreover, the player denied having ever reached an agreement with the club for the termination of the contract and alleged that, once he showed up at the club’s premises, he was not allowed to train by the Respondent.

25. In its duplica, the Respondent stressed to be not affiliated anymore “with any men’s professional soccer league in the United States”. However, the Respondent acknowledged that, during the 2018 season, it played in the National Premier Soccer League, “a men’s amateur soccer league” as the League ceased operations. In this respect, the Respondent stressed that the player’s contract “was a NASL player contract for professional soccer in the NASL”.

26. Consequently, the club argued that it terminated the contract with just cause due to the impossibility of performance depending on unforeseeable circumstances.

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 24 July 2018. Taking into account the wording of art. 21 of the 2019 edition of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (hereinafter: the Procedural Rules), the aforementioned edition of the Procedural Rules is applicable to the matter at hand.

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 2 in combination with art. 22 lit. b) of the Regulations on the Status and Transfer of Players (edition January 2020) the Dispute Resolution Chamber shall adjudicate on employment-related disputes between a club and a player that have an international dimension. As a consequence, the DRC would, in principle, be competent to decide on a litigation which involves a French player and a North-American club regarding an employment-related dispute.

3. In this respect, the Chamber was eager to emphasize that the Deputy Chairman, Mr Clifford Hendel, refrained from participating in the deliberations in the case at hand, due to the fact that he and the Respondent share the same nationality.

4. The Chamber started by acknowledging that the Respondent contested the competence of FIFA’s deciding bodies on the basis of art. 13 of the contract. On the other hand, the Chamber noted that the Claimant insisted on the competence of the FIFA DRC to adjudicate on the claim lodged by him against the Respondent.

5. Taking into account all the above, the Chamber emphasised that in accordance with art. 22 lit. b) of the January 2020 edition of the Regulations on the Status and Transfer of Players it is competent to deal with a matter such as the one at hand, unless an independent arbitration tribunal, guaranteeing fair proceedings and respecting the principle of equal representation of players and clubs, has been established at national level within the framework of the association and/or a collective bargaining agreement. With regard to the standards to be imposed on an independent arbitration tribunal guaranteeing fair proceedings, the Chamber referred to the FIFA Circular no. 1010 dated 20 December 2005. In this regard, the members of the Chamber further referred to the principles contained in the FIFA National Dispute Resolution Chamber (NDRC) Standard Regulations, which came into force on 1 January 2008.

6. While analysing whether it was competent to hear the present matter, the Chamber deemed it vital to outline that one of the basic conditions that needs to be met in order to establish that another organ than the DRC is competence to settle an employment-related dispute between a club and a player of an international dimension, is that the jurisdiction of the relevant national arbitration tribunal or national court derives from a clear reference in the employment contract.

7. Therefore, while analysing whether it was competent to hear the present matter, the DRC considered that it should, first and foremost, analyse whether the employment contract at the basis of the present dispute contained a clear jurisdiction clause.

8. In this connection, and while examining the contents of article 13 of the contract, the Chamber was of the firm opinion that the contract does not clearly and exclusively establish a national dispute resolution chamber or any similar arbitration body as competent to hear in the sense of art. 22 lit. b) of the aforementioned Regulations.

9. Additionally, the Chamber found that even if it did, no evidence has been provided by the Respondent as to the criteria upon which the commissioner of the League was chosen, in order to verify if such procedure is in line with FIFA Circular no. 1010 and the principle of equal representation. Finally, the DRC took note of the fact that it remained undisputed that the League ceased to exist following its disaffiliation by the USSF, therefore rendering incongruent that the dispute at hand could be submitted to the commissioner of an inexistent league.

10. In view of all the above, the Chamber established that the Respondents’ objection to the competence of FIFA to deal with the present matter has to be rejected and that the Dispute Resolution Chamber is competent, on the basis of art. 22 lit. b) of the Regulations on the Status and Transfer of Players, to consider the present matter as to the substance.

11. Subsequently, 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, it confirmed that in accordance with art. 26 par. 1 and par. 2 of the Regulations on the Status and Transfer of Players (edition January 2020), and considering that the present claim was lodged on 24 July 2018, the June 2018 edition of said regulations (hereinafter: Regulations) is applicable to the matter at hand as to the substance.

12. 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 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.

13. In doing so, the members of the Chamber started by acknowledging that the parties to the dispute had signed the contract on 1 February 2017 in accordance with which the Respondent would pay the Claimant a yearly fixed remuneration of USD 800,000 as well as a monthly housing allowance of USD 3,000.

14. In continuation, the Chamber noted that the Claimant lodged a claim against the Respondent maintaining that the Respondent had breached the contract by terminating it without just cause on the basis of a potestative and unbalanced clause contained in the contract.

15. Thereafter, the members of the Chamber took note of the reply of the Respondent, who alleged that the termination of the contract by its initiative was made with just cause as the League had ceased to exist, and the performance of the contract was made impossible due to frustration of the purpose for which the agreement was bargained in the first place. The Chamber also acknowledged the Respondent’s position that it had reached an agreement with the player for the termination of the contract.

16. In this context, the Chamber firstly focussed its attention on the said art. 12, lit. b) of the contract, which stipulates the following: “Club may terminate the contract between any seasons at any time after the day of Club’s last game in a season (regular season or playoff) and Club’s first game of the following season. Player acknowledges that part of the compensation paid to Player is in consideration for this right to terminate this Contract”.

17. In this regard, the Chamber took into account that such clause appears to be unilateral and to the benefit of the Respondent only, which results in an unbalanced and unfavourable clause to the detriment of the player vis-à-vis the club. In the light of such potestative character of the pertinent contractual clause, the members of the Chamber agreed that art. 12, lit. b) of the contract is not acceptable.

18. Therefore, the Chamber concurred that the said art. 12, lit. b) of the contract does not constitute a reason that can be validly invoked nor a legal basis to unilaterally terminate the contract. Consequently, the Chamber rejected the Respondent’s argument in this respect. Accordingly, the Chamber concurred that the Respondent is to be held liable for the early termination of the employment contact without just cause.

19. Subsequently, the Chamber turned to the Respondent’s submissions that the player and the club had executed a termination agreement. To this extent, the DRC recalled the contents of article 12 para. 3 of the Procedural Rules, according to which any party claiming a right on the basis of an alleged fact shall carry the burden of proof. Accordingly, and bearing in mind the evidence on file, the Chamber concluded that that no sufficient evidence had been produced by the Respondent to the extent that that the player had accepted a termination agreement or the club paid part of the amount set out therein, and therefore decided to reject the Respondent’s argument.

20. Having established that the Respondent is to be held liable for the early termination of the employment contract without just cause, 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 an amount of money from the Respondent as compensation for the termination of the contract with just cause in addition to any outstanding payments on the basis of the relevant employment contract.

21. In continuation, the DRC focused its attention on the calculation of the amount of compensation for breach of contract due to the player by the club in the case at stake. In doing so, the DRC firstly recapitulated that, in accordance with art. 17 par. 1 of the Regulations, the amount of compensation shall be calculated, in particular and unless otherwise provided for in the contract at the basis of the dispute, with due consideration for the law of the country concerned, the specificity of sport and further objective criteria, including, in particular, the remuneration and other benefits due to the player under the existing contract and/or the new contract, the time remaining on the existing contract up to a maximum of five years, and depending on whether the contractual breach falls within the protected period.

22. In application of the relevant provision, the Chamber held that it first of all had to clarify whether the pertinent employment contract contained any clause, by means of which the parties had beforehand agreed upon a compensation payable by the contractual parties in the event of breach of contract. In this regard, the Chamber observed that the employment contract does not contain any such clause.

23. As a consequence, the members of the Chamber determined that the amount of compensation payable by the club to the player had to be assessed in application of the parameters set out in art. 17 par. 1 of the Regulations. Bearing in mind the foregoing, the Chamber proceeded with the calculation of the monies payable to the player under the terms of the employment contract as from its termination and concluded that the player would have been entitled to receive USD 2,995,000 as remuneration had the employment contract been executed until its regular expiry date, i.e. 31 December 2021. This amount consists of the player’s salaries and housing allowance from June 2018 to December 2021.

24. Consequently, the Chamber concluded that the amount of USD 2,995,000 serves as the basis for the final determination of the amount of compensation for breach of contract in the case at hand.

25. In continuation, the Chamber referred to the first sentence of art. 17 par. 1 lit. ii) of the Regulations and assessed whether the Claimant had signed an employment contract with another club during the relevant period of time, by means of which he would have been able to reduce his loss of income.

26. In respect of the above, the Chamber noted that, according to the information provided by the player, he signed three new employment contracts respectively with clubs Extremadura UD, Cádiz CF, and Xanthi FC, according to which he would be entitled to receive the total amount of EUR 341,950, approx. USD 371,400, for the relevant period of time. Thus, the Chamber concluded that the mitigated compensation amounted to USD 2,623,600.

27. At this point, the Chamber referred to the wording of art. 17 par. 1 lit ii) of the Regulations as from its second sentence, which stipulates that “subject to the early termination of the contract being due to overdue payables, in addition to the Mitigated Compensation, the player shall be entitled to an amount corresponding to three monthly salaries (the “Additional Compensation”). In case of egregious circumstances, the Additional Compensation may be increased up to a maximum of six monthly salaries. The overall compensation may never exceed the rest value of the prematurely terminated contract”.

28. Bearing in mind the foregoing, the Chamber noted that that as the contract termination does not regard overdue payables, no additional compensation is due to the player.

29. Consequently, on account of all the above-mentioned considerations, the Chamber decided that the club must pay the amount of USD 2,623,600 as compensation for breach of contract to the player, which is considered by the Chamber to be a fair and reasonable amount.

30. In addition, taking into consideration the player’s claims for expenses and flight tickets, the Chamber decided that they did not have a contractual basis and therefore decided to reject them.

31. The Dispute Resolution Chamber concluded its deliberations in the present matter by establishing that the claim of the player is partially accepted.

32. Furthermore, taking into account the consideration under number II.11 above, the Chamber referred to par. 1 and 2 of art. 24bis of the Regulations, which stipulate that, with its decision, the pertinent FIFA deciding body shall also rule on the consequences deriving from the failure of the concerned party to pay the relevant amounts of outstanding remuneration and/or compensation in due time.

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

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

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

III. Decision of the Dispute Resolution Chamber

1. The claim of the Claimant, Vincenzo Rennella, is admissible.

2. The claim of the Claimant is partially accepted.

3. The Respondent, Miami FC, has to pay to the Claimant compensation for breach of contract in the amount of USD 2,623,600.

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

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

6. The Respondent shall provide evidence of payment of the due amount plus applicable interest in accordance with point III./3. above to FIFA to the e-mail address psdfifa@fifa.org, duly translated, if need be, into one of the official FIFA languages (English, French, German, Spanish).

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

8. The ban mentioned in point III./7. above will be lifted immediately and prior to its complete serving, once the due amount plus applicable interest is paid.

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

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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 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. Within another 10 days following the expiry of the time limit for filing the statement of appeal, the appellant shall file a brief stating the facts and legal arguments giving rise to the appeal with the CAS (cf. point 4 of the directives).

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

Court of Arbitration for Sport (CAS)

Avenue de Beaumont 2, CH-1012 Lausanne

Switzerland

Tel: +41 21 613 50 00

e-mail: info@tas-cas.org

For the Dispute Resolution Chamber:

Emilio García Silvero

Chief Legal & Compliance Officer