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), Chairman

Roy Vermeer (The Netherlands), member

Stefano La Porta (Italy), member

on the claim presented by the player,

Diego Živulić, Croatia,

represented by Mr Menno Teunissen

as Claimant / Counter-Respondent

against the club,

Pafos FC, Cyprus,

represented by Mr Christoforos Florou

as Respondent / Counter-Claimant

regarding an employment-related dispute

between the parties

I. Facts of the case

1. On 16 August 2018, the Croatian player, Diego Živulić (hereinafter: the player or the Claimant/Counter-Respondent) and the Cypriot club, Pafos FC (hereinafter: the club or the Respondent/Counter-Claimant) concluded an employment contract, valid as from the date of signature until 31 May 2020 (hereinafter: the contract).

2. On 17 August 2018, the parties signed a supplementary agreement (hereinafter: the supplementary agreement). Pursuant to the contract and the supplementary agreement, the player was entitled, inter alia, to the following:

- A signing-on fee of EUR 60,000 to be paid on 20 September 2018;

- A monthly salary of EUR 16,748.29 for the period between 16 August 2018 and 31 December 2018, to be paid on the “20th day of each next month”;

- A monthly salary of EUR 17,450.72 for the period between 1 January 2019 and 31 December 2019, to be paid on the “20th day of each next month”;

- A monthly salary of EUR 18,860.68 for the period between 1 January 2020 and 31 May 2020, to be paid on the “20th day of each next month”;

- EUR 350 as monthly compensation for transport;

- EUR 800 as monthly compensation for rent;

- Two round trip tickets Cyprus-Croatia per season;

- Bonus in the amount of EUR 10,000 if the player plays more than 2,500 minutes in official games in one season, to be paid “before the start of the next season”.

3. By letter dated 4 January 2019, the player put the club in default of the payment of EUR 60,000, consisting of the singing-on fee, asking to be paid within 15 days.

4. By a further letter dated 14 March 2019, the player put the club in default of the payment of EUR 60,000 as well as EUR 14,884, consisting of the signing-on fee and the monthly salary of January 2019, asking to be paid within 15 days.

5. By a further correspondence, dated 24 April 2019, the player put the club in default of the payment of EUR 15,000 as well as EUR 14,884, consisting of the remaining part of the signing-on fee and the monthly salary of February 2019, asking to be paid within 15 days.

6. On 29 May 2019, the player unilaterally terminated the contract in writing, claiming that – by then – the club had failed to remit to him EUR 15,000, consisting of remaining part of the signing-on fee, three monthly salaries (i.e. February, April and May 2019) and EUR 10,000 as bonus payment.

7. The player lodged a claim against the club maintaining that he had just cause to terminate the employment relationship and requesting:

- outstanding remuneration in the amount of EUR 77,352.16, consisting of EUR 15,000 as outstanding signing-on fee, EUR 52,352.16 as outstanding salaries for the months of February, April and May 2019, and EUR 10,000 as bonus payment;

- compensation for breach of contract in the amount of EUR 221,258.44;

- additional compensation in the amount of EUR 52,352.16;

- 5% interest p.a. on the above-mentioned amounts as from the respective due dates and sanctions to be imposed on the Respondent, as well as the reimbursement of legal costs.

8. The player explained that, notwithstanding his default notices, the club failed to meet its financial obligations and, consequently, he had just cause to terminate the employment contract on 31 May 2019 and asked to be compensated accordingly.

9. More in particular, the player maintained that he had accrued the following outstanding dues:

- EUR 15,000 as outstanding remaining part of the signing fee which was dues since 20 September 2018;

- EUR 52,352.16, representing the his monthly salaries of February, April and May 2019;

- EUR 10,000, since he had played above the threshold set in the employment contract in order to trigger the payment of the bonus.

10. The player further requested compensation for breach of contract, in the amount of its residual value, i.e. as from June 2019 until May 2020 as well as three additional salaries in accordance with art. 17 of the FIFA Regulations on the Status and Transfer of Players.

11. The club, for its part, rejected the player’s claim. Preliminarily, it maintained that the FIFA Dispute Resolution Chamber lacks jurisdiction to hear the present matter due to art. 2 par. 2 and 3 of the employment contract, which refer to the standard employment contract, which – in turn – refers to the National Dispute Resolution Chamber of the Cyprus Football Association (CFA) at its art. 13 (hereinafter: the Cypriot NDRC).

12. According to the club, therefore, since the standard employment contract clearly refers to Cypriot NDRC, which allegedly respects the principle outlined in the FIFA Circular no. 1010, the parties are bound to it because the employment contract refers to the standard employment contract.

13. Subsidiarily, the club took position on the substance of the matter.

14. The club explained that, by the time of the termination, it had paid to the Claimant/Counter-Respondent all his financial entitlements except for the salary related to the month of April 2019, which it paid on 9 July 2019.

15. In respect of the above, the club claimed that the signing-on fee had been fully paid on 30 May 2019 and, at the time of termination, the month of May 2019 was not yet due, since it was payable by 20 June 2019.

16. More in particular, concerning the signing-on fee, the club explained that it had paid it in 3 instalments: (a) EUR 30,000 on 26 March 2019; (b) EUR 15,000 on 15 April 2019 and (c) EUR 15,000 on 30 May 2019.

17. Moreover, the club pointed out that the bonus of EUR 10,000 was not yet due at the time of termination, since it was payable “before the start of the next season, i.e. before 24/08/2019”.

18. Consequently, according to the club, the Claimant did not have just cause to terminate the contract also because “he used to be paid with delay and he accepted this way of late payment”.

19. The club filed a counterclaim due to the alleged lack of just cause for the premature termination, requesting the total amount of EUR 206,453.

20. In his replica, the player entirely reiterated his position. With regard to the alleged lack of competence of the FIFA Dispute Resolution Chamber, the player pointed out there is no direct arbitration clause in the contract nor in the supplementary agreement. In any case, the player contested that the Cypriot NDRC complies with the requirements of the FIFA Circular no. 1010.

21. Concerning the merits of the case, the player rebutted that he ever agreed on any late payments from the club to begin with. Moreover, the player underlined that “a sever delay in payment had been noted since September 2018”. The player claimed that he received part of his overdue salaries only after the deadline set forth in his third formal notice and after the termination letter was sent. To this extent, the player attached a bank statement showing that the payment of EUR 29,874 from the club was performed on 3 June 2019.

22. Lastly, the player rejected the counterclaim as he claimed he had just cause to terminate the contract.

23. In its rejoinder the club reiterated its position, recognising however that it had not paid the player his salary of May 2019 and that – in relation to that – it still owed the player EUR 14,884.

24. On 2 August 2019, the Claimant he signed an employment contract with the Polish club Slask Wroclaw valid as from the date of signature until 30 June 2021, according to which he was entitled to a monthly salary of EUR 8,370 during the relevant period.

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 13 June 2019. 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 in combination with art. 22 lit. b of the Regulations on the Status and Transfer of Players (edition January 2020) the Dispute Resolution Chamber would, in principle, be competent to deal with the matter at stake, which concerns an employment-related dispute with an international dimension between a Croatian player and a Cypriot club.

3. However, the Chamber acknowledged that the Respondent contested the competence of FIFA’s deciding bodies on the basis of on the alleged existence of a jurisdiction clause in favour of the Cypriot NDRC, which supposedly respects the principles enshrined in FIFA Circular no. 1010.

4. In this regard, the Chamber noted that the Claimant rejected such position and insisted that FIFA has jurisdiction to deal with the present matter.

5. Taking into account 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 in 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. Furthermore, the members of the Chamber directly recalled the first sentence of art. 22 of the Regulations on the Status and Transfer of Players, which stipulates that FIFA’s competence is without prejudice to the right of any player or club to seek redress before a civil court for employment related disputes.

7. In this context, and while analysing whether it was competent to hear the present matter, the Dispute Resolution Chamber deemed it of utmost importance to highlight that the present dispute pertains to an employment contact.

8. Having said this, the members of the Chamber turned to the contents of the contract and the supplementary agreement, which is the basis of the present dispute between the player and the club. In this respect, the Chamber noted that neither of the aforesaid documents include any exclusive jurisdiction clause or any reference to a national arbitration body in case of a dispute between the parties.

9. Hence, the contract and the supplementary agreement do not clearly refer to a national dispute resolution chamber or any similar arbitration body in the sense of art. 22 lit. b) of the aforementioned Regulations. Therefore, the members of the Chamber deemed that there is no existence of an exclusive jurisdiction clause in the termination agreement which would preclude the Chamber from adjudicating on the present dispute.

10. For the sake of completeness, the Chamber emphasized that, in line with the jurisprudence of the Dispute Resolution Chamber, the Cypriot NDRC does not seem to observe the principle of equal representation between players and clubs, in light of the fact that the regulation in place regarding the Cypriot NDRC grant the Cyprus Football Association influence on the selection process of player members as opposed to club members.

11. In view of all the above, the Chamber established that the Respondent’s objection towards 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.

12. Subsequently, the DRC 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, he confirmed that in accordance with art. 26 par. 1 and 2 of the Regulations on the Status and Transfer of Players (edition January 2020) and considering that the present claim was lodged in front of FIFA on 13 June 2019, the June 2018 edition of the Regulations on the Status and Transfer of Players (hereinafter: the Regulations) is applicable to the matter at hand as to the substance.

13. 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.

25. By doing so, the Chamber firstly recalled that the parties had signed an employment contract and a supplementary agreement, valid until 31 May 2020, and according to which the player was entitled, inter alia, to the following:

- A signing-on fee of EUR 60,000 to be paid on 20 September 2018;

- A monthly salary of EUR 16,748.29 for the period between 16 August 2018 and 31 December 2018, to be paid on the “20th day of each next month”;

- A monthly salary of EUR 17,450.72 for the period between 1 January 2019 and 31 December 2019, to be paid on the “20th day of each next month”;

- A monthly salary of EUR 18,860.68 for the period between 1 January 2020 and 31 May 2020, to be paid on the “20th day of each next month”;

- EUR 350 as monthly compensation for transport;

- EUR 800 as monthly compensation for rent;

- Two round trip tickets Cyprus-Croatia per season;

- Bonus in the amount of EUR 10,000 if the player plays more than 2,500 minutes in official games in one season, to be paid “before the start of the next season”.

14. In continuation, the members of the Chamber took into account that, on 29 May 2019, the player notified the club of the termination of the contract on the basis of outstanding remuneration, amounting to EUR 77,352.16, and corresponding to remaining part of the signing-on fee, three monthly salaries (i.e. February, April and May 2019) and EUR 10,000 as bonus payment. The club, for its part, submits that the player terminated the contract without just cause, and requested compensation for breach of contract.

15. The DRC highlighted that the central issue in the matter at stake would be, thus, to determine as to whether the player had just cause to terminate the contract on 29 May 2019.

16. The Chamber wished to emphasize that, according to the player, at the time of the termination of the contract, the total amount of EUR 77,352.16 was yet to be paid by the club. The DRC further observed that the player granted the club in writing, in three different opportunities, with respective deadlines of 15 days to cure its default, to no avail.

17. The Chamber then turned its attention to the arguments of the club and acknowledged that, according to the latter, by the time of the termination, it had paid to the player all his financial entitlements, except for the salary related to the month of April 2019.

18. In continuation, the DRC recalled that according to the legal principle of the burden of proof contained in art. 12 par. 3 of the Procedural Rules, any party claiming a right on the basis of an alleged fact shall carry the burden of proof. With that in mind, the Chamber observed that the club did not presented evidence of having timely delivered payment of the player’s requested salaries.

19. As such, and in light of the player’s submissions, the Chamber concluded that the club, at the time of the termination, had failed to pay the player two monthly salaries, as well as part of the signing-on fee.

20. On account of the above and taking into consideration the Chamber’s longstanding jurisprudence in this respect, the Chamber decided that the player had just cause to unilaterally terminate the contract on 29 May 2019 and that the club is to be held liable for the early termination of the contract with just cause by the player.

21. As a consequence, and in accordance with the general legal principle of pacta sunt servanda, the Chamber decided that the club is liable to pay to the player the amounts which were outstanding under the contract at the moment of the termination. However, the Chamber observed that the player acknowledged a payment made by the club after the termination of the contract for an amount of EUR 29,874. Therefore, the DRC concluded that the player is entitled to receive EUR 17,450.72 for the month of April 2019, and EUR 2,576.76 as outstanding balance of the player’s salary for February 2019.

22. In addition, taking into consideration the Claimant/Counter-Respondent’s request as well as the constant practice of the Dispute Resolution Chamber in this regard, the members of the Chamber decided to award the Claimant/Counter-Respondent interest at the rate of 5% p.a. on the outstanding amounts from its due dates, i.e. respectively 20 March 2019 and 20 May 2019 until the date of effective payment.

23. In continuation, the Chamber focused its attention on the calculation of the amount of compensation for breach of contract in the case at stake. In doing so, the members of the Chamber firstly recapitulated that, in accordance with art. 17 par. 1 of the Regulations, the amount of compensation shall be calculated, in particular and unless otherwise provided for in the contract at the basis of the dispute, with due consideration for the law of the country concerned, the specificity of sport and further objective criteria, including, in particular, the remuneration and other benefits due to the 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.

24. In application of the relevant provision, the Chamber held that it first of all had to clarify as to whether the pertinent employment contract contains a provision by means of which the parties had beforehand agreed upon an amount of compensation payable by the contractual parties in the event of breach of contract. In this regard, the Chamber established that no such compensation clause was included in the employment contract at the basis of the matter at stake.

25. 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 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.

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

27. Bearing in mind the foregoing, the Chamber proceeded with the calculation of the monies payable to the player under the terms of the contract as from its date of termination with just cause by the player, i.e. 29 May 2019, until 31 May 2020, and concluded that the player would have received in total EUR 243,909.16 as remuneration had the contract been executed until its expiry date. Consequently, the Chamber concluded that the amount of EUR 243,909.16 serves as the basis for the final determination of the amount of compensation for breach of contract in the case at hand.

28. In continuation, the Chamber verified as to whether the Claimant/Counter-Respondent I had signed an employment contract with another club during the relevant period of time, by means of which he would have been enabled to reduce his loss of income. According to the constant practice of the DRC, and article 17 par.1 lit. ii) of the Regulations, 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.

29. The Chamber recalled that the player signed an employment contract with the Polish club Slask Wroclaw, valid until 30 June 2021, in accordance with which the player was to receive a total fixed remuneration of EUR 83,700. Accordingly, the Chamber concluded that the mitigated compensation due to the player, comprehending both the residual value of the contract and the amounts the player was able to mitigate, amounts to EUR 160,209.16.

30. Further, the Chamber turned its attention to art. 17 par. 1 lit ii) of the Regulations, and observed 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 as additional compensation.

31. The Chamber then proceeded to calculate the additional compensation, and noted that the player was entitled to an average salary of EUR 17,450.72 in line with the contract. Accordingly, the player is entitled to receive three times the referred amount, that is, EUR 52,352.16.

32. Consequently, on account of all of the above-mentioned considerations and the specificities of the case at hand as well as the player’s general obligation to mitigate his damage, the Chamber decided to partially accept the player’s claim and that the club must pay the amount of EUR 212,561.32 as compensation for breach of contract in the case at hand.

33. In addition, taking into account the player’s request as well as the constant practice of the Dispute Resolution Chamber in this regard, the Chamber decided that the club must pay to the Claimant/Counter-Respondent interest of 5% p.a. on the amount of compensation as of 13 June 2019 until the date of effective payment.

34. Finally, taking into account the consideration under number II./12. 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.

35. In this regard, the DRC 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.

36. Therefore, bearing in mind the above, the DRC decided that, in the event that the Respondent/Counter-Claimant does not pay the amounts due to the Claimant/Counter-Respondent within 45 days as from the moment in which the Claimant/Counter-Respondent, following the notification of the present decision, communicates the relevant bank details to the Respondent, 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 Respondent in accordance with art. 24bis par. 2 and 4 of the Regulations.

37. The DRC 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/Counter-Respondent, Diego Živulić, is admissible.

2. The claim of the Claimant/Counter-Respondent partially accepted.

3. The counterclaim of the Respondent/Counter-Claimant, Pafos FC, is rejected.

4. The Respondent/Counter-Claimant has to pay to the Claimant/Counter-Respondent the amount of EUR 232,588.80, plus interest at the rate of 5% p.a. as follows:

- on the amount of EUR 2,576.76 as from 20 March 2019 until the date of effective payment;

- on the amount of EUR 17,450.72 as from 20 May 2019 until the date of effective payment;

- on the amount of EUR 212,561.32 as from 13 June 2019 until the date of effective payment.

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

6. The Claimant/Counter-Respondent is directed to inform the Respondent/Counter-Claimant, 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 amounts mentioned under point III./4. above.

7. The Respondent/Counter-Claimant shall provide evidence of payment of the due amount in accordance with point III./4. above to FIFA to the e-mail address psdfifa@fifa.org, duly translated into one of the official FIFA languages (English, French, German, Spanish).

8. In the event that the amount plus interest due in accordance with point III./4. above is not paid by the Respondent/Counter-Claimant within 45 days as from the notification by the Claimant/Counter-Respondent of the relevant bank details to the Respondent/Counter-Claimant, the Respondent/Counter-Claimant shall be banned from registering any new players, either nationally or internationally, up until the due amount is 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).

9. The ban mentioned in point III./8. above will be lifted immediately and prior to its complete serving, once the due amounts are paid.

10. In the event that the aforementioned sum plus 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.

*****

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.

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