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 player,

Stojan Vranjes, Bosnia and Herzegovina,

represented by Mr Marcin Kwiecien

as Claimant

against the club,

Legia Warszawa, Poland,

represented by Mr Jakub Laskowski & Mr Grzegorz Knap

as Respondent

regarding an employment-related dispute arisen between the parties

I. Facts of the case

1. On 29 August 2015, the Bosnian player, Stojan Vranjes (hereinafter: the Claimant) and the Polish club, Legia Warszawa (hereinafter: the Respondent) entered into an employment contract (hereinafter: the contract) valid as of 31 August 2015 until 30 June 2018.

2. On 5 December 2016, the Claimant and the Respondent concluded a mutual termination agreement (hereinafter: the termination agreement) by means of which they agreed to terminate the contract.

3. Article 1.2 of the termination agreement stipulates that “the Parties undertake that [the Respondent] is required to pay [the Claimant] remuneration in accordance with the following provisions:

1.1.1. 80,000 EUR (…) net, to be paid not later than on 31.12.2016;

1.1.2. 70,000 EUR (…) net, to be paid nota later than on 15.07.2017”.

4. Article 1.3. foresaw that “(…) the payment of the remuneration (…) satisfies all claims of [the Claimant] related to [the Respondent]”.

5. Moreover, article 1.5. of the termination agreement provided that “in case of any delay concerning the payment of the remuneration stipulated in point 1.1.2. above 30 days, [the Respondent] is obliged to pay to [the Claimant] a contractual penalty amounting to 1,000 EUR (one thousand euro) for every day of such delay after 15.08.2017” (hereinafter; the penalty clause or penalty).

6. Furthermore, article 3.1. of the termination agreement underlined that the agreement “shall be governed by and interpreted in accordance with the relevant regulations of [the Polish Football Association (PZPN)] and by Polish law in the extent not covered by these regulation”.

7. In addition, the termination agreement provided in its article 3.2. the following: “All disputes concerning proprietary and non-proprietary rights, which may be subject to settlement, arising out of or in connection with conclusion, validity, performance or termination of [the termination agreement], [the parties] shall exclusively submit for resolution of [the] PZPN”.

8. Finally, article 3.5. of the agreement provided the Respondent’s applicable email addresses for “all written notices, letters etc. required under or connected with [the termination agreement]”.

9. On 19 December 2016, the amount of EUR 80,000 was duly paid by the Respondent to the Claimant.

10. On 19 November 2017, the Claimant put the Respondent in default of payment of EUR 70,000 “(…) and also all the penalties stated in contract”, setting a 10 days’ deadline in order to remedy the default.

11. On 21 November 2017, the Respondent acknowledged the Claimant’s default notice, referred to a delay of payment due to ownership changes and recognised that “the payment of the second tranche has not been done” and confirmed having proceeded to the relevant payment in the amount of EUR 70,000.

12. On 2 and 14 December 2017, the Claimant acknowledged the payment of EUR 70,000 and requested the Respondent to proceed with the payment of EUR 98,000, in accordance with the penalty clause, and gave a deadline of 10 days to comply.

13. On 18 December 2017, the Respondent contacted the Claimant and asked if he could confirm receipt of the aforementioned sums.

14. On 28 December 2017, the Respondent proceeded with a bank transfer to the player amounting to EUR 1,772.05.

15. On 20 March 2018, the Claimant put the Respondent in default of payment of EUR 98,000, referring to “(…) a contractual penalty for the delay in the performance of the financial obligations under [the agreement]”, setting a 7 days’ deadline in order to remedy the default before referring “the case to Football Arbitration Court”.

16. On 28 March 2018, the Respondent rejected the Claimant’s request by stating that “(…) the contractual penalty (…) pursuant to (…) item 1.5. of [the termination agreement] is absolutely invalid by virtue of the Polish law (…) as reservation of a contractual penalty in respect of monetary obligations is unacceptable”.

17. On 5 December 2018, the Claimant lodged a claim against the Respondent in front of FIFA requesting, as outstanding payment, the following:

a. EUR 99,000 as the due amount in accordance with the penalty clause;

b. To determine that said amount is net of any and all deductions such as taxes.

c. The player also requested 5% interest p.a. on the abovementioned amount as of the due date.

18. In his claim, the Claimant first explained that the payment of the second installment, i.e. EUR 70,000, only occurred after “several default notices”.

19. Moreover, the Claimant sustained that he also claimed several times the payment of the penalty clause, however, to no avail as the club explicitly denied said request.

20. In its reply to the claim, the Respondent challenged FIFA’s competence to adjudicate the present matter and held that the PZPN was competent.

21. In support of its allegations, the Respondent referred to the agreement’s article 3.2. (cf. I./7. above) allegedly providing that the parties contractually agreed to submit all disputes to the competent national body.

22. Moreover, the Respondent provided various arguments and evidence in order to prove that there is a Chamber (“Football Arbitration Court”, hereinafter: the Football Arbitration Court or the FAC) inside the PZPN and that it is an independent national arbitration tribunal, which guarantees fair proceedings and respects the principle of equal representation of players and clubs.

23. In this respect, the Respondent provided a copy of the FAC’s regulations. In particular, article 11 stipulates, inter alia, as follows: “1. The Football Arbitration Court consists of 25 to 27 arbiters appointed by the Management Board of PZPN”. In addition, article 15 of the regulations, for its parts, provides, inter alia, the following: “1. The Chairman, the Vice-Chairman and the Secretary of the Arbitration Court shall be appointed and dismissed by the Management Board of PZPN from among the arbiters of the Football Court of Arbitration”.

24. In addition, the Respondent submitted a letter of the PZPN dated 7 March 2019, in which, inter alia, the PZPN stated that the FAC was competent to hear the present dispute. The PZPN however declared that “due to the (…) lack of national and international legal grounds for the functioning of arbitration in Poland on the basis of parity, it has not yet been possible to put down in the PZPN’s statute that the Football Arbitration Court operates taking account the equal representation of football players and football clubs”.

25. Furthermore, the Respondent sustained in various explanations that the national body, referred to in the present matter, has to be differentiated from the NDRC established at the national level in Poland as “(…) the NDRC does not have the exclusive jurisdiction in the employment related disputes in Poland (…)” in contrary to said national body which “(…) holds the exclusive jurisdiction in respect to disputes concerning pecuniary obligations (...)”.

26. What is more, the Respondent sustained that the Claimant allegedly performed “(…) forum shopping in order to get the case heard in front of the FIFA DRC, which is more likely to provide a more favorable judgement for the player rather than the [national body]”. In this respect, the Respondent referred to the Claimant’s correspondence dated 20 March 2018 according to which he allegedly intended to seize the national body (cf. I./15. above).

27. Moreover, the Respondent referred to the application of national law to the present matter as agreed between the parties (cf. I./6. above). As such, the Respondent deemed that “(…) the parties of [the termination agreement] intentionally decided to exclude FIFA regulations from the applicable regulations to [the termination agreement]”. Therefore, the Respondent reminded that “(…) FIFA DRC should analyze the relevant arrangements made by the parties of the dispute, including law chosen by the parties to interpret and govern their contractual relationship (…)” and that ” (…) in case the FIFA DRC decides that it has a jurisdiction in the present case, it needs to take in account (…) national laws of Poland”.

28. As to the substance, and in case FIFA should be competent to decide on the matter at hand, the Respondent underlined that in its opinion the penalty clause should be considered as invalid in accordance with Polish law as “in case contracting parties stipulate for contractual penalty arising from a monetary obligation it will not be enforceable and should be deemed as null and void”.

29. Furthermore, the Respondent reminded that it paid on its own initiative late payment interest over the relevant amount (cf. I./14.), which, on one side constituted “the standard annual rate of 7%” and, on the other side, clearly proved its good faith in the present matter.

30. In addition and notwithstanding its position in accordance with national law, the Respondent also deemed that the penalty clause is to be considered as abusive and excessive as “(…) the penalty in the amount of EUR 1,000 for every day in delay equal to interest rate of 521,4% per annum”.

31. In support of its arguments, the Respondent referred to the jurisprudence of FIFA as well as to the Swiss case law, according to which “a penalty clause exceeding the amount of 18% per annum has to be considered as abusive”, and requested for said clause to be dismissed.

32. Finally, the Respondent added that should the penalty clause nevertheless be considered as validly concluded, said penalty should still be considered as excessive and therefore proportionally reduced according to Swiss law.

33. In his replica, the Claimant firstly rejected the Respondent’s argumentation as to the competence of the national body.

34. In this respect, the Claimant referred to the regulations of the FAC as to its composition (cf. I./22. above) and underlined that “nowhere it is mentioned that the Football Arbitration court is composed of equal represented players and clubs (…)” and, as a consequence, that the national body “(…) does not guarantee the equal representation of players and clubs”. The Claimant pointed out that that the requirements set out in FIFA Circular no. 1010 and the FIFA NDRC Standard Regulations in this respect were not met.

35. Furthermore, the Claimant deemed that the proceedings in front of the national body are fee-based, something which cannot be accepted as “(…) pursuant to Article 31 of FIFA NDRC Standard Regulations proceedings should be free of charge”.

36. Moreover, the Claimant also explained that according to him, “(…) there is no possibility to appeal from the final decision of the [national body]” to the arbitration body as referred to in article 33 of the FIFA NDRC Standard Regulations.

37. As to the substance, the Claimant firstly reiterated his position as described in his initial claim.

38. In addition, the Claimant underlined the following as to sum-up his comments on the club’s reply to the claim: “[The Parties] mutually agreed the amount of the contractual penalty. The aim of the penalty was to assure a timely payment for [the Claimant]. [The Claimant] had bad experiences with [the Respondent] which did not pay on time. Delay with the payment for more than 30 days is a serious breach of contract. [The Claimant] was not represented by a lawyer or an agent. [The Respondent] was not pushed by [the Claimant] to put the contractual penalty in such amount”.

39. In its duplica and regarding the issues raised by the player as to why the FAC is not competent in the present case, the Respondent rejected the Claimant’s entire argumentation explaining that in its opinion, “neither FIFA Circular no. 1010 nor NDRC Standard Regulations (…) do not require to include the principle of equal representation of players and clubs in the independent national tribunals by laws ()…”, and also that ”(…) the [national body] does respect the principle of equal representation of players and clubs”.

40. In addition, the Respondent held that the NDRC Standard Regulations to which the Claimant referred to are applicable to the NDRC, not to the FAC.

41. Moreover, the Respondent deemed that the costs incurred by the parties in front of the FAC are to be considered reasonable.

42. As to the substance, the Respondent did not provide further comments and reiterated the content of its reply to the claim.

II. Considerations of the Dispute Resolution Chamber

1. First of all, the Dispute Resolution Chamber (hereinafter also referred to as DRC or Chamber) analysed whether it was competent to deal with the case at hand. In this respect, the Chamber took note that the present matter was submitted to FIFA on 5 December 2018. Consequently, the 2018 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 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 October 2019) the DRC shall adjudicate on employment-related disputes between a club and a player that have an international dimension.

3. As a consequence, the Chamber, in principle, is competent to decide on the present litigation which involves a Bosnian player and a Polish club regarding an employment-related dispute.

4. However, the DRC acknowledged that the Respondent contested the competence of FIFA’s deciding bodies on the basis of art. 3.2 of the termination agreement alleging that the competent body to deal with any dispute deriving from the relevant employment contract is the Football Arbitration Court of the PZPN.

5. 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.

6. Taking into account all the above, the Chamber emphasised that in accordance with art. 22 lit. b) of the October 2019 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. Equally, the members of the Chamber referred to the principles contained in the FIFA National Dispute Resolution Chamber (NDRC) Standard Regulations, which came into force on 1 January 2008.

7. In this respect, the DRC turned its attention to the principle of equal representation of players and clubs and underlined that this principle is one of the very fundamental elements to be fulfilled, in order for a national dispute resolution chamber to be recognised as such. Indeed, this prerequisite is mentioned in the Regulations on the Status and Transfer of Players, in the FIFA Circular no. 1010 as well as in art. 3 par. 1 of the NDRC Regulations, which illustrates the aforementioned principle as follows: “The NDRC shall be composed of the following members, who shall serve a four-year renewable mandate: a) a chairman and a deputy chairman chosen by consensus by the player and club representatives (…); b) between three and ten player representatives who are elected or appointed either on proposal of the players’ associations affiliated to FIFPro, or, where no such associations exist, on the basis of a selection process agreed by FIFA and FIFPro; c) between three and ten club representatives (…).” In this respect, the FIFA Circular no. 1010 states the following: “The parties must have equal influence over the appointment of arbitrators. This means for example that every party shall have the right to appoint an arbitrator and the two appointed arbitrators appoint the chairman of the arbitration tribunal (…). Where arbitrators are to be selected from a predetermined list, every interest group that is represented must be able to exercise equal influence over the compilation of the arbitrator list”.

8. On account of the above, the Chamber went on to examine the documentation presented by the Respondent and noted that art. 11 of the regulations of the FAC stipulates that “the Football Arbitration Court consists of 25 to 27 arbiters appointed by the Management Board of PZPN”, and that art. 15 indicates that “the Chairman, the Vice-Chairman and the Secretary of the Arbitration Court shall be appointed and dismissed by the Management Board of PZPN from among the arbiters of the Football Court of Arbitration”. The DRC duly noted in this regard that the PZPN itself declared on 7 March 2019 that “due to the (…) lack of national and international legal grounds for the functioning of arbitration in Poland on the basis of parity, it has not yet been possible to put down in the PZPN’s statute that the Football Arbitration Court operates taking account the equal representation of football players and football clubs”.

9. Consequently, the Chamber was unanimous in its conclusion that it is not possible to establish with utmost certainty that the FAC does respect the principle of equal representation of players and clubs.

10. In addition, the DRC noted that it is acknowledged by both parties that the proceedings conducted in front of the FAC are fee-based. The Chamber found that the imposition of these costs were not in accordance with art. 32 of the NDRC Regulations.

11. As a consequence of the above-mentioned elements, the Chamber concluded that it could not be concluded that the Football Arbitration Court is indeed an independent arbitration tribunal guaranteeing fair proceedings and respecting the principle of equal representation of players and clubs.

12. On account 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.

13. 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 referred, on the one hand, to art. 26 par. 1 and 2 of the Regulations on the Status and Transfer of Players (edition June 2019) and, on the other hand, to the fact that the present claim was lodged on 5 December 2018. Therefore, the DRC concluded that 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.

14. The competence of the Chamber and the applicable regulations having been established, and entering into the substance of the matter, the DRC continued 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.

15. First of all, the DRC acknowledged that the Claimant and the Respondent entered into a termination agreement on 5 December 2016 according to which the Claimant was entitled to receive EUR 80,000 on or before 31 December 2016 and EUR 70,000 on or before 15 July 2017. What is more, the Chamber noted that the termination agreement foresaw that should the second instalment remained unpaid after 15 August 2017, a daily penalty of EUR 1,000 for every subsequent day of delay shall be paid by the Respondent.

16. The DRC further observed that the Claimant lodged a claim in front of FIFA against the Respondent seeking payment of the amount of EUR 99,000 plus 5% interest p.a., corresponding to the alleged outstanding penalty clause.

17. The Chamber acknowledged that the Claimant mainly held that the Respondent only paid the second instalment of the termination agreement on 21 November 2017 after several default notices.

18. Furthermore, the DRC observed that the Respondent, for its part, argued that the penalty clause was disproportionate in line with the Chamber’s jurisprudence as well as CAS jurisprudence and Swiss Law, and should be therefore dismissed or at least reduced.

19. In this respect, the Chamber first pointed out that the parties voluntarily entered into the termination agreement, and mutually agreed on the imposition of the penalty clause. Therefore, the DRC concluded that penalty clauses may be freely entered into by the contractual parties and may be considered acceptable, in the event that the pertinent written clause meets certain criteria such as proportionality and reasonableness. In this respect, the Chamber highlighted that in order to determine as to whether a penalty clause is to be considered acceptable, the specific circumstances of the relevant case brought before it shall also be taken into consideration.

20. In the specific case at hand, the DRC observed that the penalty clause was not representing a fixed amount, but rather a daily amount of EUR 1,000 per day of delay as from 16 August 2017 until the date of effective payment. In this regard, the Chamber underlined that such clause should rather be considered a hidden interest rate corresponding to an annual interest of around 521.4%.

21. In line with the Chamber’s jurisprudence, as well as CAS jurisprudence and in accordance with Swiss Law, the DRC had no other option but to conclude that the penalty clause was disproportionate, and decided to reduce it to a rate of 18% p.a., a rate that shall be applicable as from 16 August 2017, i.e. the date upon which the penalty clause was triggered, until 21 November 2017, i.e. the date of effective payment of the second instalment of EUR 70,000.

22. The DRC, however, acknowledged that the Respondent made a payment of an amount of EUR 1,772.05 to the Claimant on 28 December 2017 and decided to deduct such amount from its calculation of the penalty fee due in the present matter.

23. As a result, and in view of all the above, the Chamber determined that the Respondent has to pay the Claimant the amount of EUR 1,377.95 corresponding to remainder of the penalty fee

24. Furthermore, in accordance with the constant practice of the DRC, the Chamber decided to reject the request for interest of the Claimant, as the amount awarded itself constitutes interest.

25. The DRC concluded its deliberations in the present matter by establishing that any further claim lodged by the Claimant is rejected.

26. Furthermore, taking into account the consideration under number II.13 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.

27. 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.

28. 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.

29. 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.

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III. Decision of the Dispute Resolution Chamber

1. The claim of the Claimant, Stojan Vranjes, is admissible.

2. The claim of the Claimant is partially accepted.

3. The Respondent, Legia Warszawa, has to pay to the Claimant the amount of EUR 1,377.95.

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 addresses 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 3 above.

6. The Respondent shall provide evidence of payment of the due amount in accordance with point 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 in accordance with point 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 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).

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

9. In the event that the aforementioned sum 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 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.

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