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 20 February 2020

Decision of the

Dispute Resolution Chamber

passed in Zurich, Switzerland, on 20 February 2020,

in the following composition:

Clifford Hendel (USA), Deputy Chairman

Roy Vermeer (The Netherlands), member

Daan De Jong (The Netherlands), member

on the claim presented by the player,

Hugo Lopez Martinez, Spain,

represented by Mr Rosalia Ortega Pradillo

as Claimant

against the club,

Dhofar Club, Oman

as Respondent

regarding an employment-related dispute

between the parties

I. Facts of the case

1. On an unspecified date, the player, Hugo Lopez Martinez (hereinafter: the player or the Claimant), concluded an employment contract with the club, Dhofar Club (hereinafter: the club or the Respondent), valid as from 5 August 2017 until the “end of season 2017/2018”, according to which the player was entitled to a total remuneration in the amount of USD 110,000

2. On 11 June 2018, the parties concluded a “Termination Agreement” (hereinafter: the agreement), according to which, the Respondent recognized to have a total debt of USD 85,000.

3. The agreement stipulated the following:

“2 – That both sides have the willingness to reach an agreement and recognize that the Club has a present debt of 85.000 US-Dollar […] both parties agree to conclude the present debt recognition, as well as with the postponement of payment thereof which is to be realized as follows:

A) The recognized debt is thus equivalent to 85.000 US-Dollar.

B) As form of payment, the following postponement is agreed:

-1st payment in the amount of 29.750 US-Dollar (35% of the total debt) to enter into the bank account of the creditor before the 30th of June 2018.

-2nd payment in the amount of 29.750 US-Dollar (another 35% of the total debt) to enter into the bank account of the creditor before the 30th of July 2018.

-3rd payment in the amount 25.000 US-Dollar (remaining debt of the total debt after the payment of the first two installments) to enter into the bank account of the creditor before the 30th of August 2018.

[…]

C) The failure to pay according to the stipulated deadlines agreed upon in the present contract will entitle the Player to claim for all of the pending installments plus 1% of the total debt for each week of delay of payment. The creditor may claim before the corresponding instances the payment of said amounts the debtor must also pay the creditor the damages and expenses caused by the breach.” (hereinafter: the penalty clause).

4. On 3 September 2018, the Claimant tried to put the club in default by registered mail, however, the letter could not be delivered.

5. On 29 October 2018, the Claimant tried to contact the club via the Oman FA, but again, the registered mail failed.

6. On 13 December 2018, the player put the club in default via email.

7. On 23 March 2019, the player lodged a claim against the club before FIFA and requested the following:

- USD 85,000 “for the unpaid salaries that must have taken effect on 30, June 2018;

- USD 30,600, corresponding to the “penalty”, “plus USD 850 for each week of delay”;

- 5% interest p.a. on the above mentioned amounts as from the due dates.

8. In his claim, the player deemed that the club failed to pay any amounts in accordance with the agreement and therefore requested the overdue amount, plus the agreed penalty of 1% of the total amount per week, i.e. USD 850 for each week of delay.

9. In its reply, the club argued that from the original agreed USD 110,000, the club paid a total amount of USD 46,400, which according to the club showed that it acted in “good faith”.

10. Furthermore, the club deemed that it paid medical costs in the amount of USD 15,600, which the club deemed that it “has right to be paid”.

11. Finally, the club argued that the penalty clause is excessive and should be reduced to 5% p.a.

12. In his replica the player claimed that it was mutually agreed that he shall be treated in Spain and that the club would pay all the medical expenses. Despite such a mutual agreement, the player argued that the club only paid USD 15,000 of the total USD 26,000 medical costs.

13. Moreover, the player highlighted that some of the payment confirmation provided by the club, concern payments made in relation to the player’s operation and not to the salary. In any case, the player stressed that by signing the agreement, the club acknowledged all its debt as of June 2018. In this regard, the player highlighted that all the payment confirmations provided by the club are dated prior to the signing of the agreement.

14. In addition, the player claimed that one of the payment confirmations provided by the club, was actually never signed by the player which can be seen on the document, as the player’s signature is missing.

15. As for the penalty clause, the player insisted on the payment of the agreed amount, however, alternatively deemed that in the event said percentage should be lowered, he should be entitled to a minimum of 18% p.a.

16. In its duplica the club reiterated its previous arguments and acknowledged that the parties did agree that the club will pay the treatment in Spain, however, according to the club it was also agreed that the player will pay this amount back to the club.

17. The club insisted that it has paid the player the amount of Riyal 10,500 (USD 27,300) and therefore the player shall only be entitled to USD 63,590.

18. Finally, the club rejected the validity of the penalty clause.

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 23 March 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 conjunction with art. 22 lit. b) of the Regulations on the Status and Transfer of Players, the DRC is competent to deal with the matter at stake, which concerns an employment-related dispute with an international dimension between a Spanish player and an Omani club.

3. Furthermore, the Chamber analysed which regulations should be applicable as to the substance of the matter. In this respect, it confirmed that in accordance with art. 26 par. 1 and 2 of the Regulations on the Status and Transfer of Players, and considering that the present claim was lodged on 23 March 2019, 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 Chamber entered into the substance of the matter. Subsequently, the DRC continued by acknowledging the above-mentioned facts as well as the documentation contained in the file in relation to the substance of the matter. 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.

5. Having said this, 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.

6. The Chamber started with a careful examination of the content of the termination agreement concluded between the Claimant and the Respondent on 11 June 2018. In this respect, it noted that said agreement provided for the Claimant to receive from the Respondent the amount of USD 85,000 as follows:

- USD 29,750 to be paid by 30 June 2018;

- USD 29,750 to be paid by 30 July 2018;

- USD 25,000 to be paid by 30 August 2018.

7. Furthermore, the Chamber observed that in case of non-compliance of the aforementioned payments within the relevant deadlines, the termination agreement stipulated that all pending instalments will become due and that the Respondent would pay to the Claimant 1% “of the total debt for each week of delay of payment”.

8. Moreover, the DRC took note that, according to the player, the club did not make any payment in regards to the termination agreement and that therefore, the full amount became due, as well as a “penalty” of 1% or USD 850 per week.

9. Subsequently, the members of the DRC took note that the club, for its part, argued that it paid the player a total amount of USD 46,400 from the originally agreed amount of USD 110,000. In addition, the Chamber acknowledged the Respondent’s arguments that the club would be entitled to the payment of USD 15,600, which correspond to the player’s medical costs. Finally, the DRC observed that the Respondent claimed that the penalty stipulated in the termination agreement should be considered as excessive and be reduced to 5% p.a.

10. In light of the foregoing, the DRC first wished to point out, that the Respondent only deemed that it is entitled to be reimbursed the medical costs paid to the player, without specifically requesting to be paid such amounts. In addition, the Chamber noted that the Respondent didn’t provide any evidence which would indicate that the Respondent would be entitled to the reimbursement of the medical costs paid to the player.

11. In continuation, the DRC then proceeded to analyse all the payment confirmations provided by the club and observed that not all of those confirmations were signed by the player. In addition, the members of the DRC noted that all of these payment confirmations were dated before the conclusion of the termination agreement, i.e. before 11 June 2018 and therefore, the DRC could not consider any of those alleged payments to have been made in regards to the termination agreement.

12. Bearing in mind the aforementioned, the DRC concluded that the amounts as stipulated in the termination agreement in the amount of USD 85,000 remained unpaid. In this respect, the members of the Chamber concurred that the club must fulfil its obligations as per the termination agreement in accordance with the general legal principle of “pacta sunt servanda”. Consequently, the Chamber decided that the club is liable to pay to the player the amount that remained outstanding since the time of the termination i.e. the amount of USD 85,000.

13. In continuation, the DRC then focussed its attention on clause C of the termination agreement, which literally established that: “The failure to pay according to the stipulated deadlines agreed upon in the present contract will entitle the Player to claim for all of the pending installments plus 1% of the total debt for each week of delay of payment.”

14. The Chamber noted that, the amount of 1% per week added to the debt of delay in payment in fact consists of a hidden interest rate, and not a penalty. In fact, such weekly amount accounts to an interest of around 52% p.a. over the principle amount. These interest rates are clearly excessive and disproportionate, in accordance with the Chamber’s jurisprudence as well as with Swiss law and thus, need to be reduced.

15. Bearing in mind the foregoing, the Chamber referred to his previous conclusion, in particular, that the Respondent has so far not paid any amounts as per the termination agreement and that no valid reasons were provided by the Respondent for such a delay. Furthermore, the Chamber also noted that the termination agreement indeed stipulated the application of interest for late payment, however at excessive rate. Thus, taking into consideration its well-established jurisprudence as well as Swiss law, the Chamber decided to reduce such interest to the amount of 18% p.a., as from 1 July 2018 until the date of effective payment.

16. Furthermore, taking into account the consideration under number II./3. 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.

17. 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.

18. Therefore, bearing in mind the above, the DRC decided that, in the event that the Respondent does not pay the amounts due to the Claimant within 45 days as from the moment in which the Claimant, 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.

19. Moreover, 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.

20. Finally, the DRC decided to partially accept the player’s claim and concluded its deliberations by rejecting any further claim of the player.

III. Decision of the Dispute Resolution Chamber

1. The claim of the Claimant, Hugo Lopez Martinez, is partially accepted.

2. The Respondent, Dhofar Club, has to pay to the Claimant outstanding remuneration in the amount of EUR 85,000, plus 18% interest p.a. as from 1 July 2018 until the date of effective payment.

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

4. 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 amounts mentioned under point 2. above.

5. The Respondent shall provide evidence of payment of the due amounts in accordance with point 2. 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).

6. In the event that the amounts due in accordance with point 2. above are 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 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).

7. The ban mentioned in point 6. above will be lifted immediately and prior to its complete serving, once the due amounts are paid.

8. In the event that the aforementioned amounts are 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 (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