F.I.F.A. – Dispute Resolution Chamber / Camera di Risoluzione delle Controversie – labour disputes / controversie di lavoro (2020-2021) – fifa.com – atto non ufficiale – Decision 29 September 2020

Decision of the

Dispute Resolution Chamber

Passed on 29 September 2020,

regarding an employment-related dispute concerning the player Katsumi Yusa

COMPOSITION:

Omar Ongaro (Italy), Deputy Chairman

Roy Vermeer (the Netherlands), member

José Luis Andrade (Portugal), member

CLAIMANT:

Katsumi Yusa, Japan

Represented by Ms. Nan Sato

RESPONDENT:

Chennai City FC, India

Represented by Mr. Srinivasan Srini

I. FACTS

1. On 4 April 2019, the parties concluded an employment contract valid as from 1 August 2019 until 30 June 2020.

2. Clause 4 of the contract reads as follows: “the Player will be paid a fixed remuneration of USD 7,100 per month (Net USD 6,390 after 10% TDS) or Total Gross USD 78,100 for the entire period. The payment will be done within 7 working days of the subsequent month”

3. In addition, clause 7 of the contract established the following: “The Player will be provided with three economy class flight return tickets for the season from Tokyo to the city of the club and back. He may use the tickets for himself or his family depending on if they stay with him or not. He will be reimbursed the actual cost of his, his wife and his chiId’s visa on arrival in India.”

4. On 14 March 2020, the All India Football Federation (AIFF) suspended the local league due to the COVID-19 outbreak and following a directive by the government of India of 12 March 2020.

5. On 21 March 2020, the player sent a default notice to the club, indicating the following:

“You are hereby notified that you have defaulted under said note because you have failed to pay the monthly salaries due 11 February 2020 for the salary of January, and 10 March 2020 for the salary of February 2020, in the amount of USD 14,200 (equivalent to INR 980,000).

Therefore, demand is hereby made upon you for full payment of the entire balance due on said note in the amount of USD 14,200 (equivalent to INR 980,000).

If the entire amount due is not received on or before 5 April 2020, I shall terminate a contract with just cause for outstanding salaries according to the Article 14bis of the FIFA Regulations on the Status and Transfers of Players. Please be advised that your obligations to pay further salaries until 30 June 2020 will remain valid under FIFA jurisprudence.”

6. On the same date i.e. 21 March 2020, but by a letter dated 20 March 2020, and after the previous notice, the club sent a letter to the player by means of which it terminated the contract. The letter stated, inter alia, the following:

“Considering the situation, the whole sporting leagues including the league in India and international events like the AFC have been suspended and we don’t have any information regarding the next way forward in the league. This is a new situation for the club and the club is trying to resolve with its inherent capability, but the situation is a Global epidemics which has gone beyond our control. As you may aware that the Indian Govt. has already ordered closure of all sporting events and banned from using the stadiums in India for sports.

Especially now, the Tamil Nadu Govt. and Sports Development Authority have advised the club to send the foreigners safely back to their respective countries and give a report to them on the exit of the players.

This situation has brought to the club no other alternative but to terminate the contract under the Forcemajure [sic] clause. However, the Club will ensure that the fees payable for the month of January and February, 2020 will be paid in due course once the situation becomes better in India, and will be intimated once it is done.

The club will ensure that your safety and security is at most important for us and we shall be committed to arrange a safe exit to your respective countries. In case the travel back is being taken care by you then the Club will not be held liable for any untoward things happens during the transit period. In case of any need of your services once the issues are settled globally, we may contact you. We thank you for your services for CCFC.

We once again reiterate that this situation has not been experienced by our club and we do not have any control of this Global Epidemic Situation.

We trust as a professional player, you would understand this global situation and support us from your end.”

7. On 7 April 2020, the player sent a letter to the club by means of which he outlined that the contract did not have a “force majeure” clause and hence the termination had taken place without just cause. The player accordingly requested payment of his outstanding remuneration as well as compensation for breach of contract in the total amount of USD 35,500 by no later than 13 April 2020.

8. On 9 April 2020, the club sent a letter to the player by means of which it inter alia confirmed the contents of its letter of 21 March 2020.

9. On 21 April 2020, the AIFF cancelled the local league.

10. On 30 April 2020, the player addressed a letter to the club by means of which he inter alia objected to the club’s position and requested payment of USD 43,249 (i.e. six months of remuneration) as outstanding remuneration as well as compensation for breach of contract, plus USD 649 as reimbursement of air fares.

11. On 8 May and 29 May 2020, further to a number of exchange of correspondences between the parties, the club sent a settlement offer to the player.

12. The player stated that he did not enter into any contract as of the date of his claim.

13. On 23 June 2020, the player lodged a claim before FIFA for outstanding remuneration and breach of contract without just cause.

14. According to the player “the Club’s unilateral termination of the Contract is in violation of the FIFA COVID-19 Guidelines. The Club used COVID-19 as a convenient pretext to evade its contractual obligations, which had fallen due months before the COVID- 19 crisis affected India.”

15. The player further argued that “the Club’s unilateral termination of the Contract is not warranted under national law, since the doctrine of frustration did not apply under Indian Law at the time of the termination of the Contract on March 20, 2020. 30. Under Indian law, the doctrine of frustration of contracts may only be invoked when the performance of a contract has become impossible. In other words, only if the performance has become useless in terms of the object and purpose of the contract, then the contract becomes frustrated”. In particular, the player outlined that by the time the termination of the contract took place, the competitions were merely suspended and not cancelled.

16. In view of the above, the player requested the total amount of USD 51,899, “plus all applicable interests in USD”, broken down as follows:

a. USD 7,100 in outstanding salary for January 2020;

b. USD 7,100 in outstanding salary for February 2020;

c. USD 5,325 in outstanding salary for the first three weeks of March 2020;

d. USD 23,075 as the residual value of the Contract, including:

- USD 1,775 for the last week of March 2020;

- USD 7,100 for April 2020;

- USD 7,100 for May 2020;

- USD 7,100 for June 2020; and

e. USD 649 (JPY 70,755) in unreimbursed flight cost from Chennai to Tokyo.

f. USD 4,325 (10% of the total monetary damages) as moral damages;

g. USD 4,325 as attorneys’ fees accordance with CAS 2015/A/3871.

17. The Respondent rejected the player’s claim.

18. Firstly, the club addressed its settlement offer to the player and argued that due to special financial regulations in place for payments in India, combined with the necessary precautions due to the pandemic, it could not timely pay the amounts offered to the player. Accordingly, the Respondent stressed that “it will honour the settlement offer (Annexure - 9) and will make a final payment, no later than 90 (ninety) days from the date on which an order is passed by the Dispute Resolution Chamber”.

19. Secondly, the club reverted to the doctrine of frustration and, while referencing the FIFA COVID-19 Football Regulatory Issues, argued that the decision by the AIFF to cancel the local league amounted to a force majeure circumstance. In this respect, the club further elaborated that the Indian Contract Act, 1872, as interpreted by the Supreme Court of India, “allows parties to a contract to cease performing their contractual obligations when it becomes impossible to do so, due to circumstances beyond the control of the parties”. In conclusion, the club ‘stood frustrated’ in light of the changes in circumstances, in particular:

i. rising number of cases in India;

ii. Government action (including the notification in Annexure 3 advising national sporting bodies to refrain from organizing unavoidable sports events);

iii. Mohun Bagan AC having already mathematically won the Hero I-League title and thereby not rendering the conduct of the remaining matches to be unavoidable;

iv. travel restrictions being imposed by countries across the world.

20. Lastly, the club argued that it terminated the contract with just cause. In this sense, the club submitted that due to the fact that all the competitions it was playing at the time (i.e. the local league and the AFC Cup) were suspended or cancelled, “the Respondent could not have engaged the services of the Claimant in any competition”. Accordingly, the respondent is of the opinion that it “acted in complete good faith at the time of termination of the Contract”

21. In sum, the Respondent requested the following:

(a) Dismiss the claim in its entirety;

(b) Order the Claimant to bear all legal costs incurred by the Club in relation to the current proceedings;

(c) Order the Claimant to bear all costs in relation to the administrative and procedural aspects of the current proceedings; and

(d) Pass any other order or relief that you may deem fit in the current circumstances.

II. CONSIDERATIONS OF THE DISPUTE RESOLUTION CHAMBER

1. First of all, the Dispute Resolution Chamber (hereinafter also referred to as Chamber or DRC) analysed whether it was competent to deal with the case at hand. Taking into account the wording of art. 21 of the June 2020 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 Dispute Resolution Chamber referred to art. 3 par. 1 of the Procedural Rules and emphasised 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, the Dispute Resolution Chamber is competent to deal with matters which concern employment-related disputes with an international dimension between players and clubs, as it occurs with the matter at stake, which concerns a Japanese player and an Indian club.

3. In continuation, the Dispute Resolution Chamber analysed which edition of the Regulations of the Status and Transfer of Players should be applicable to the present matter. In this respect, the Dispute Resolution Chamber 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 claim was lodged on 23 June 2020, the March 2020 edition of the aforementioned regulations (hereinafter: the Regulations) is applicable to the matter at hand.

4. With the above having been established, the Dispute Resolution Chamber entered into the substance of the matter. In doing so, it started to acknowledge the facts of the case as well as the documents contained in the file. However, the Dispute Resolution Chamber emphasized that in the following considerations it will refer only to facts, arguments and documentary evidence which it considered pertinent for the assessment of the matter at hand.

5. In this respect, the DRC noted that, on 4 April 2019, the parties concluded an employment contract valid as from 1 August 2019 until 30 June 2020.

6. Subsequently, the Chamber observed that, the player lodged a claim before FIFA for outstanding remuneration and breach of contract without just cause, arguing that the club terminated the contract without just cause on 21 March 2020.

7. Conversely, the Chamber noted that the Respondent requested the rejection of the claim, noting, inter alia, that in view of the doctrine of frustration, it was entitled to terminate the contract due to the effects of the COVID-19 pandemic and in view of the existence of force majeure.

8. Therefore, members of the Chamber highlighted that the underlying issue in this dispute, considering the diverging position of the parties, was to determine as to whether the contract was terminated with or without just cause by the Respondent on 21 March 2020. The Chamber also underlined that, subsequently, if it were found that the contract was terminated without just cause, it would be necessary to determine the consequences for the party that was responsible for the early termination of the contractual relation.

9. The Chamber, first of all, wished to highlight that the unilateral termination of the contract by the Respondent, was seemingly based on the fact that due to the worldwide COVID-19 pandemic.

10. Having said that, the Chamber wished to refer to the fact that, in light of the worldwide COVID-19 outbreak, FIFA issued a set of guidelines, the COVID-19 Guidelines, which aim at providing appropriate guidance and recommendations to member associations and their stakeholders, to both mitigate the consequences of disruptions caused by COVID-19 and ensure that any response is harmonized in the common interest of the global football community. Moreover, on 11 June 2020, FIFA has issued an additional document, referred to as FIFA COVID-19 FAQ, which provides clarification about the most relevant questions in connection with the regulatory consequences of the COVID-19 outbreak and identifies solutions for new regulatory matters.

11. Analysing the concept of a situation of force majeure, the members of the Chamber noted that, based on the contents of the FIFA COVID-19 Guidelines and the FIFA COVID-19 FAQ, the COVID-19 outbreak was not to be considered as a force majeure situation in any specific country or territory. Also, in line with the aforementioned guidelines, no specific employment or transfer agreement was impacted by the concept of force majeure.

12. As such, the contents of the aforementioned documents establishes in general that clubs or its employees cannot rely on the FIFA COVID-19 Guidelines or the decision of the FIFA Bureau, to assert a force majeure situation. The analysis whether a situation of force majeure existed, has to be considered on a case-by-case basis, taking into account all the relevant circumstances.

13. Turning to the content of the file, the members of the Chamber were eager to emphasize that the Respondent, is this particular matter, did not submit any form of documentary evidence or allegations that the situation it faced, was to be considered a situation of force majeure. In addition, the Chamber noted that the contract did include any clause concerning force majeure.

14. In this respect, it appeared to the members that there is no documentation on file, on the basis of which it could be concluded that the Respondent took the applicable precautions, or attempted to mitigate the damages for the Claimant. As mentioned, the Respondent decided to immediately and unilaterally terminate the contract, without exploring less drastic measures.

15. Having established that in the current matter, no situation of force majeure could be established, and thus, that the Respondent could not prove that the termination based on article 17 of the contract was in line with wording of said article, the members of the Chamber also wished to refer to the fact that said documents – as per the explicit wording of FAQ nr. 16, as well as pages 6 and 7 of the FIFA COVID-19 Guidelines, that said guidelines are only applicable to “unilateral variations to existing employment agreements”. Therefore, the guidelines do not apply to unilateral terminations of existing employment agreements, as was the case in the matter at hand. The members of the Chamber further noted that for the assessment of disputes that arise before the FIFA judicial bodies concerning unilateral termination of a contract, the FIFA Regulations as well as the established jurisprudence of the Chamber, shall apply.

16. In this respect, the Chamber was eager to emphasise that, as the FIFA Regulations, only a breach or misconduct which is of a certain severity justifies the termination of a contract. 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.

17. In view of the above, the Chamber first of all observed that the Respondent had unilaterally terminated the contract on 21 March 2020, without any prior indication or warning towards the player. What is more, the Respondent did not undertake any attempt to find an amicable solution with the player, and rather unilaterally terminated the contract with the player.

18. For the sake of completeness, the Chamber also noted that, just before the termination, the player sent a default notice, by means of which he requested outstanding salaries due since at least January 2020, i.e. before the outbreak of the pandemic in India. In the view of the Chamber, the termination letter appears to be a reaction to the player’s default notice.

19. Furthermore, regardless of the question whether the Claimant or the Respondent was to be held responsible for the effects of the COVID-19 pandemic on the contract, the Chamber was of the firm opinion that the Respondent, since such circumstance, in this particular situation could not legitimately be considered as being severe enough to justify the termination of the contract. The Chamber was of the opinion that there would have been more lenient measures to be taken (for instance, among others, a temporary amendment of the salary and/or a temporary suspension of the contract, in order to find a solution for the circumstances occurred as from March 2020.

20. Moreover, the members of the Chamber deemed it vital to outline that it remained uncontested that the Respondent had not fulfilled its financial obligations set forth in the employment contract signed between the parties and that it failed to pay to the Claimant the salaries, respectively, the amounts of

USD 7,100 for January 2020 and USD 7,100 as outstanding salary for February 2020.

21. On account of all the abovementioned considerations, the Chamber decided that the Respondent had no just cause to unilaterally terminate the employment relationship between the Claimant and the Respondent and, therefore, concluded that the Respondent had terminated the employment contract without just cause on 21 March 2020. Consequently, the Respondent is to be held liable for the early termination of the employment contact without just cause.

22. Bearing in mind the previous considerations, the Chamber went on to deal with the consequences of the early termination of the employment contract without just cause by the Respondent.

23. First of all, the members of the Chamber concurred that the Respondent must fulfil its obligations as per employment contract up until the date of termination of the contract in accordance with the general legal principle of “pacta sunt servanda”.

24. On account of the above considerations and the documentation on file, the Chamber decided that the Respondent is liable to pay to the Claimant the remuneration that was outstanding at the time of the termination i.e. the amounts of USD 7,100 for the outstanding salary of January 2020 and USD 7,100 as outstanding salary for February 2020, for the total amount of USD 14,200 gross, as clearly specified in the contract

25. In addition, taking into account the Claimant’s claim, as well as the Chamber’s longstanding jurisprudence in this respect, the Chamber decided to award the Claimant interest of 5% p.a. as of the respective due dates.

26. In continuation, the Chamber decided that, taking into consideration art. 17 par. 1 of the Regulations, the Claimant is entitled to receive from the Respondent compensation for breach of contract in addition to any outstanding remuneration on the basis of the relevant employment contract.

27. In this context, the Chamber outlined that, in accordance with said provision, 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 Claimant 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.

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

29.Subsequently, and in order to evaluate the compensation to be paid by the Respondent, the members of the Chamber took into account the remuneration due to the Claimant in accordance with the employment contract as well as the time remaining on the same contract, along with the professional situation of the Claimant after the early termination occurred. In this respect, the Chamber pointed out that at the time of the termination of the employment contract on 21 March 2020, the contract would run for until 30 June 2020, that is, three more months, plus the salary of March, which was not yet due on the date of termination. Consequently, taking into account the financial terms of the contract, the Chamber concluded that the remaining value of the contract as from its early termination by the Respondent until the regular expiry of the contract amounts to USD 28,400 gross (i.e. 4*7,100 gross) and that such amount shall serve as the basis for the final determination of the amount of compensation for breach of contract.30.In continuation, the Chamber remarked that following the early termination of the employment contract at the basis of the present dispute, the Claimant was not able to find new employment. As a result, no further amounts will be deducted from the compensation the player would be entitled to.31.In view of all of the above, the Chamber decided that the Respondent must pay the amount of USD 28,400 gross to the Claimant as compensation for breach of contract without just case, which is considered by the Chamber to be a reasonable and justified amount as compensation.32.In addition, taking into account the Claimant’s claim and the longstanding jurisprudence of the Chamber in this respect, the Chamber decided to award the Claimant interest of 5% p.a. as from the date of the claim.33.In addition, concerning the Claimant’s request for the reimbursement of flight tickets, the Chamber observed the contents of clause 7 of the contract, and established that, in accordance with the contract and its jurisprudence in this respect, that the Claimant is entitled to the reimbursement of USD 649 for said tickets. Equally, taking into account the Claimant’s claim, as well as the Chamber’s longstanding jurisprudence in this respect, the Chamber decided to award the Claimant interest of 5% p.a. on said amount as of the respective due date.34.Moreover, the Chamber rejected the Claimant’s request for moral damages in accordance with its jurisprudence in this respect, due to a lack of legal or contractual basis, as well as due to a lack of substantiation and evidence.35.Furthermore, and referring to the Claimant’s request pertaining to court fees and lawyer fees, the Chamber stated that according to art. 18 par. 2 of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber, DRC proceedings are free of charge. Moreover, par. 4 of the said provision establishes that no procedural compensation shall be awarded in proceedings of the DRC. The relevant request had thus to be rejected.36.Furthermore, taking into account the previous considerations, the Dispute Resolution 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.

37. In this regard, the Dispute Resolution 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.

38. Therefore, bearing in mind the above, the Dispute Resolution Chamber 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.

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

III. DECISION OF THE DISPUTE RESOLUTION CHAMBER

1. The claim of the Claimant, Katsumi Yusa, is partially accepted.

2. The Respondent, Chennai City FC, has to pay to the Claimant the following amounts:

- USD 14,200 gross as outstanding remuneration plus 5% interest p.a. as from 23 June 2020 until the date of effective payment;

- USD 649 as outstanding remuneration plus 5% interest p.a. as from 23 June 2020 until the date of effective payment;

- USD 28,400 gross as compensation for breach of contract without just cause plus 5% interest p.a. as from 23 June 2020 until the date of effective payment.

3. Any further claims of the Claimant are rejected.

4. The Claimant is directed to immediately and directly inform the Respondent of the relevant bank account to which the Respondent must pay the due amount.

5. The Respondent shall provide evidence of payment of the due amount in accordance with this decision to psdfifa@fifa.org, duly translated, if applicable, into one of the official FIFA languages (English, French, German, Spanish).

6. In the event that the amount due, plus interest as established 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 following consequences shall arise:

1.

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. The aforementioned ban mentioned will be lifted immediately and prior to its complete serving, once the due amount is paid.

(cf. art. 24bis of the Regulations on the Status and Transfer of Players).

2.

In the event that the payable amount as per in this decision 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 the FIFA Disciplinary Committee.

7. The decision is rendered free of costs.

For the Dispute Resolution Chamber:

Emilio García Silvero

Chief Legal & Compliance Officer

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) within 21 days of receipt of the notification of this decision.

NOTE RELATED TO THE PUBLICATION:

FIFA may publish this decision. For reasons of confidentiality, 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 Procedural Rules).

CONTACT INFORMATION:

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