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 22 January 2020

Decision of the Single Judge

of the Players’ Status Committee

passed in Zurich, Switzerland, on 22 January 2020,

by

Roy Vermeer (The Netherlands)

Single Judge of the Players’ Status Committee,

on the claim presented by the coach

Marijo Tot, Croatia,

represented by Davor Radic

as “Claimant”

against the club

Ittihad FC, Saudi Arabia,

represented by Jan Kleiner

as “Respondent”

regarding a contractual dispute arisen between the parties.

I. Facts of the case

1. On 27 September 2018, the Croatian coach, Marijo Tot (hereinafter: the coach or the Claimant), concluded an employment contract (hereinafter: the contract) with the Saudi Arabian club, Ittihad FC (hereinafter: the Respondent or the club) (hereinafter jointly referred to as the parties), as an assistant coach of the head coach, Slaven Bilic. The contract was valid as from the date of signature until 30 May 2021.

2. By means of Item 4 of the contract, the coach was entitled to the following remuneration:

i. USD 345,000 for the 2018/2019 season, as follows:

- USD 103,500 within 7 working days after the date of signature;

- 10 instalments of USD 24,150 payable as from the end of October 2018 until the end of July 2019.

ii. USD 345,000 for the 2019/2020 season;

iii. USD 345,000 for the 2020/2021 season.

3. As per Item 10.1 of the contract, “no unilateral termination may be issued by either party during the sporting season 2018/2019”.

4. Item 10.2 stipulates that if “the club terminates the contract in the seasons 2019/2020 and 2020/2021 [it] pays the amount of the total net remuneration per one year in the amount of net USD 345,000. No further damages or compensation shall apply and this total amount […] shall be the only compensation payable, determined as just and fair compensation in exchange for the early termination of contract”.

5. Item 10.3 stipulates that the coach “may terminate this contract at any time on condition that the [coach] pays the club the amount of the total net remuneration per one year in the amount of net USD 345,000. No further damages or compensation shall apply and this total amount […] shall be the only compensation payable, determined as just and fair compensation in exchange for the early termination of contract”.

6. On 24 February 2019, the club inter alia announced on its official Twitter account that it has decided to “terminate the contract” of the head coach and his staff.

7. On 28 February 2019, the club informed the head coach in writing that it had proposed to him the function of sporting director and that his financial situation “would remain unaffected”. However, as per the club, now that the head coach refused this offer, the club expressed its “sincere wish […] to find an amicable solution”.

8. On 3 March 2019, the head coach responded to the club’s letter of 28 February 2018 inviting the club to “immediately settle all the payments of receivables up to now for the [head] coach and staff members”.

9. On 5 March 2019, the head coach informed the club in writing that if he does not receive the club’s written proposals for him and his staff “within a time frame of 7-10 days”, he will submit the matter to FIFA.

10. According to the coach, on 7 April 2019 the club sent a draft Settlement Agreement “subject to agreement” dated 2 April 2019 to the head coach and his staff. According to clause 1.1. of the Settlement Agreement, the club would commit itself to pay to the head coach USD 14,020,000.

11. Clause 1.2 of the Settlement Agreement provided the following: “the payments […] shall be made [to the head coach] and it shall be the responsibility of the [head coach] to distribute the respective amounts to the […] staff, as separately agreed between the coach and the […] staff”.

12. On 14 April 2019, the coach informed the club that, “in order […] to accept [the club’s] proposal, we suggest that […] after the payment of the outstanding debts […] individual agreements be made for each party as it was the case with employment contracts”.

13. On 2 July 2019, the coach wrote a letter to the club requesting “in 10 days following the sending of this letter, you deliver to us the individual agreements on termination of contract. […] In the event that you do not do so, you will force us to use our legal rights”.

14. The coach lodged a claim against the club for breach of contract requesting the following:

i. USD 20,700 as outstanding remuneration plus 5% interest p.a. as from 25 February 2019;

ii. USD 834,900 as compensation for breach of contract plus 5% interest p.a. as from 25 February 2019.

15. According to the coach, the decision of the club to terminate the employment contract on 24 February 2019 did not comply with the ultima ratio principle. In this context, the coach argued that the reasons stated by the club in its announcement of 24 February 2019 do “not have reached serious levels that would justify the termination of the [contract]”.

16. Thus, as per the coach, the club terminated the employment contract without just cause.

17. In continuation, the coach referred to Item 10 of the employment contract, and stated that the parties had not agreed upon a “liquidated damages clause for the first season of the employment contract”.

18. Thus, as per the coach, he was entitled to compensation in the amount equal to the residual value of the contract, i.e. USD 834,900.

19. With regard to the request for outstanding remuneration, the coach highlighted that he had received his salaries up until January 2019, but that the club had not paid him “the part of remuneration for February 2019 which is equivalent net USD 20,700”.

20. In reply to the coach’s claim, the club firstly explained that “in the course of February 2019, [it] was confronted with a difficult sporting situation, which made a reorganization of the coaching staff necessary”. As per the club, it tried to “maintain the contractual relationship and assign new duties to the entire coaching staff. This was unfortunately not possible, which is why the employment contracts of the entire coaching staff was terminated”.

21. In continuation, the club argued that, in an attempt to reach an amicable settlement, it was “met by unfair, unjustified and disproportionately high financial requests” from the coach.

22. Moreover, the club referred to Item 10 of the contract and held that the parties had agreed “that the contract had an initial “guaranteed” period of one sporting season, and that as from the second sporting season, the contract could be terminated at all times against payment of a pre-determined amount”.

23. In light of this, the club acknowledged that a financial compensation for the termination of the contract is due, but that “anything that [coach] can claim can, at maximum, relate to the remainder of the initial contractual period (until 30 May 2019), plus any compensation that was agreed subsequently as liquidated damages”.

24. In other words, as per the club, “the maximum amount that the [coach] could request is USD 441,600” as follows:

i. “USD 96,600 for the remainder of the season 2018/2019;

ii. USD 345,000 as liquidated damages that would be due afterwards, i.e. as from the season 2019/2020”.

25. In continuation, the club argued that the coach has the “obligation to duly mitigate his damages”.

26. Thus, the club concluded that “a very substantial reduction should be made to the claim of [the coach], i.e. a reduction of no less than 50%. In other words, the maximum amount that [the coach] could request […] can be USD 220,800”.

27. On 5 December 2019, the coach informed FIFA that, on that moment, he was unemployed.

II. Considerations of the Single Judge of the Players’ Status Committee

1. First of all, the Single Judge of the Players’ Status Committee (hereinafter also referred to as: the Single Judge) analysed whether he was competent to deal with the matter at hand. In this respect, he took note that the present matter was submitted to FIFA on 18 July 2019. Consequently, the Single Judge concluded that the 2018 edition of the Procedural Rules is applicable to the matter at hand (cf. art. 21 of the Procedural Rules).

2. Subsequently, the Single Judge referred to art. 3 par. 1 and 2 of the Procedural Rules and confirmed that in accordance with art. 23 par. 1 and 4 in combination with art. 22 lit. c) of the 2020 edition of the Regulations on the Status and Transfer of Players, he is competent to deal with the matter at stake which concerns an employment-related dispute of an international dimension between a Croatian coach and a Saudi Arabian club.

3. Furthermore, the Single Judge analysed which edition of the Regulations on the Status and Transfer of Players should be applicable to the matter. In this respect, he referred, on the one hand, to art. 26 par. 1 and 2 of the 2020 edition of the Regulations on the Status and Transfer of Players, and on the other hand, to the fact that the present claim was lodged with FIFA on 18 July 2019. In view of the foregoing, the Single Judge concluded that the June 2019 edition of the Regulations on the Status and Transfer of Players (hereinafter: the Regulations) is applicable to the case at hand (cf. art. 26 par. 1 and 2 of the Regulations).

4. His competence and the applicable regulations having been established, and entering into the substance of the matter, the Single Judge started his analysis by acknowledging the facts of the case and the arguments of the parties as well as the documents contained in the file. However, the Single Judge emphasized 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. In this respect, the Single Judge acknowledged that, on 27 September 2018, the coach and the club had concluded an employment contract valid until 30 May 2021 which provided for the coach to work as assistant to the head coach against a seasonal remuneration of USD 345,000 for the 2018/2019, 2019/2020 and 2020/2021 seasons, the first season’s remuneration being subdivided in a single payment of USD 103,500 payable within the first week as of the date of signature, and in 10 monthly instalments of USD 24,150 each, payable as of the end of October 2018 until the end of July 2019.

6. In continuation, the Single Judge remarked that, in his claim to FIFA, the Claimant had accused the Respondent of having terminated their contractual relationship without just cause on 24 February 2019 invoking “the modest results of [the club] in the past period which did not rise to expectations”, which in the coaches’ opinion, did not comply with the ultima ratio principle as, in its statement, the club did “not have reached serious levels that would justify the termination of the [contract]”.

7. The Single Judge also noted that, as such, the Claimant deemed inter alia being entitled to claim from the Respondent the payment of outstanding remuneration in the amount of USD 20,700, together with 5% interest p.a. as from 25 February 2019, and of compensation for breach of contract in the sum of USD 834,900 corresponding to the residual value of the contract, together with 5% interest p.a. as from 25 February 2019. In this respect, the Single Judge also noted that the coach referred to item 10 of the employment contract and held that no liquidated damages clause had been agreed between the parties for the first season.

8. In addition, the Single Judge noticed that, for its part, the Respondent, had rejected the claim of the Claimant arguing that due to a difficult sporting season, in the course of February 2019, it had to reorganize the coaching staff and subsequently tried to amicably settle the situation with the entire coaching staff, among which the coach, however to no avail.

9. Moreover, the Single Judge also took note of the Respondent’s arguments as to the possible application of item 10 to the present case and, as well, that in case the coaches’ claim should be accepted, the requested amounts for compensation should be revised downwards.

10. After having thoroughly analysed the submissions of the parties as well as the documentation at his disposal, the Single Judge deemed that the first question to be addressed in the present matter was whether the Respondent had terminated the contract with or without just cause on 24 February 2019.

11. In this regard, the Single Judge recalled that the Respondent considered having rightfully terminated the contract as it needed to reorganize the coaching staff due to the results of the club which it considered as modest.

12. In this context, the Single Judge acknowledged that it had to examine whether the reason put forward by the Respondent could justify the termination of the contract in the present matter.

13. In this respect, the Single Judge referred to his well-established jurisprudence and emphasised that, as a general rule, only a breach or misconduct which is of a certain severity justifies the termination of a contract without notice. In other words, only when there are objective criteria which do not reasonably permit to expect a continuation of the employment relationship between the parties, a contract may be terminated prematurely. Hence, if there are more lenient measures which can be taken in order for an employer to ensure the employee’s fulfilment of his contractual duties, such measures must be taken before terminating an employment contract. A premature termination of an employment contract can only ever be an ultima ratio measure.

14. In addition, the Single Judge also recalled that, still in accordance to its longstanding jurisprudence, sporting results cannot be retained as a valid reason to justify an early termination of an employment contract.

15. As a consequence and considering the above, the Single Judge held that, despite the club’s explanations referring to its attempts to settle the issue financially with the coach once the termination occurred, the reason put forward by it on 24 February 2019, i.e. the reorganization of the coaching staff, cannot be considered as a valid reason for unilateral contract termination.

16. In view of all the aforementioned, the Single Judge was of the firm opinion that the club did not have just cause to prematurely terminate the employment contract with the coach.

17. After having established the foregoing, the Single Judge went on analysing the consequences of the termination of contract without just cause committed by the club.

18. Nevertheless, before entering the analysis of the consequences of the unjust termination of contract on the part of the club, the Single Judge deemed it appropriate to first assess whether any outstanding remuneration was still due by the club to the coach.

19. In this regard, the Single Judge underlined that the coach had requested from the club the payment of USD 20,700 as the part of remuneration for February 2019 corresponding to 24 worked days, with an interest of 5% per year as from 25 February 2019. However, the Single Judge noted that, in accordance with the contract, the due date of payment of the monthly salary being the last day of the month, i.e. 28 February 2019, said amount should be considered as part of the compensation due to him instead of outstanding remuneration.

20. As a consequence, and having established the aforementioned, the Single Judge turned his attention to the compensation payable to the coach by the club following the termination without just cause of contract by the latter.

21. In this respect, the Single Judge 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.

22. In this sense, the Single Judge recalled the arguments of the parties as to the relevant provisions of the contract and observed that item 10.2 of the contract provides for a compensation clause in case the club terminates during the seasons 2019/2020 and 2020/2021. However, the Single Judge took note that the club terminated during the season 2018/2019. Consequently, the Single Judge held that the compensation clause is not applicable to the case at hand, and, therefore, compensation can be assessed on the basis of the residual value of the contract in line with the jurisprudence of the Players’ Status Committee.

23. Bearing in mind the foregoing, the Single Judge proceeded with the calculation of the monies payable to the coach under the terms of the employment contract as from the date of termination without just cause by the Respondent until its natural expiration. Bearing this in mind, the Single Judge deemed that he would have received in total USD 834,900 as remuneration for the period as from February 2019 until 30 May 2021, said amount consisting of 6 monthly salaries of USD 24,150 for the 2018/2019 season, including the salary for the month of February 2019, originally requested as outstanding remuneration, USD 345,000 for the 2019/2020 season and USD 345,000 for the 2020/2021 season. At this point, the Single Judge was eager to emphasize that said amount corresponded to what the coach claimed as compensation, i.e. he requested the salary of February 2019 twice. Consequently, the Single Judge concluded that the amount of USD 834,900 serves as the basis for the final determination of the amount of compensation for breach of contract in the case at hand.

24. Equally, the Single Judge verified as to whether the coach had signed a new employment contract after having been dismissed by the club on 24 February 2019 by means of which he would have been enabled to reduce his loss of income. According to his constant practice, such remuneration under a new employment contract would be taken into account in the calculation of the amount of compensation for breach of contract in connection with the coach’s general obligation to mitigate his damages.

25. The Single Judge recalled that, after termination of the contract, the coach was not able to mitigate his damages, as he remained unemployed.

26. In view of the above, the Single Judge concluded that the amount of USD 834,900 is to be paid by the club to the coach as compensation for breach of contract.

27. Equally and with regard to the coach’s request for interest, the Single Judge, in accordance with his well-established jurisprudence, decided that the club has to pay to the coach 5% interest p.a. on the amount of USD 834,900 as from 18 July 2019 until the date of effective payment.

28. In addition, the Single Judge established that any other request of the coach had to be rejected.

29. Lastly, the Single Judge referred to art. 25 par. 2 of the Regulations in combination with art. 18 par. 1 of the Procedural Rules, according to which in the proceedings before the Players’ Status Committee and the Single Judge, costs in the maximum amount of CHF 25,000 are levied. The costs are to be borne in consideration of the parties’ degree of success in the proceedings and are normally to be paid by the unsuccessful party.

30. In this respect, the Single Judge reiterated that the claim of the coach is partially accepted and that the club is at fault. Therefore, the Single Judge decided that the club has to bear the costs of the current proceedings in front of FIFA.

31. Furthermore and according to Annexe A of the Procedural Rules, the costs of the proceedings are to be levied on the basis of the amount in dispute. Consequently and taking into account that the total amount at dispute in the present matter is higher than CHF 200,001, the Single Judge concluded that the maximum amount of costs of the proceedings corresponds to CHF 25,000.

32. In conclusion and in view of the invalidity of the reason advanced by the club for the early termination of the contract occurred without just cause, the Single Judge determined the costs of the current proceedings to the amount of CHF 25,000.

33. Consequently, the Single Judge determined that the club has to pay the amount of CHF 25,000 in order to cover the costs of the present proceedings.

III. Decision of the Single Judge of the Players’ Status Committee

1. The claim of the Claimant, Marijo Tot, is partially accepted.

2. The Respondent, Ittihad FC, has to pay to the Claimant within 30 days as from the date of notification of the present decision, compensation for breach of contract in the amount of USD 834,900, plus 5% interest p.a. on the said amount as from 18 July 2019 until the date of effective payment.

3. If the aforementioned sum, plus interest as established above, is not paid within the aforementioned deadline, the present matter shall be submitted, upon request, to FIFA’s Disciplinary Committee for consideration and a formal decision.

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

5. The final costs of the proceedings in the amount of CHF 25,000 are to be paid by the Respondent, Ittihad FC, as follows:

5.1 The amount of CHF 20,000 has to be paid to FIFA to the following bank account with reference to case nr. 19-01508/osv:

UBS Zurich

Account number 366.677.01U (FIFA Players’ Status)

Clearing number 230

IBAN: CH27 0023 0230 3666 7701U

SWIFT: UBSWCHZH80A

5.2 The amount of CHF 5,000 has to be paid directly to the Claimant.

6. The Claimant is directed to inform the Respondent immediately and directly of the account number to which the remittances under point 2, and 5.2 above are to be made and to notify the Players’ Status Committee of every payment received.

*****

Note related to the publication:

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

Note related to the appeal procedure:

According to article 58 par. 1 of the FIFA Statutes, this decision may be appealed against before the Court of Arbitration for Sport (CAS). The statement of appeal must be sent to the CAS directly within 21 days of receipt of notification of this decision and shall contain all the elements in accordance with point 2 of the directives issued by the CAS. Within another 10 days following the expiry of the time limit for filing the statement of appeal, the appellant shall file a brief stating the facts and legal arguments giving rise to the appeal with the CAS (cf. point 4 of the directives).

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

Court of Arbitration for Sport

Avenue de Beaumont 2

1012 Lausanne

Switzerland

Tel: +41 21 613 50 00

Fax: +41 21 613 50 01

e-mail: info@tas-cas.org

For the Single Judge of

the Players’ Status Committee:

Emilio García Silvero

Chief Legal & Compliance Officer