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 4 November 2020

Decision of the

DRC Judge

passed on 4 November 2020,

regarding an employment-related dispute concerning the player Mugabo Gabriel

BY:

Alexandra Gómez Bruinewoud (Uruguay / The Netherlands), DRC Judge

CLAIMANT:

Mugabo Gabriel, Rwanda

Represented by Mr Elvis Majani

RESPONDENT:

KCB FC, Kenya

I. FACTS OF THE CASE

1. On 10 June 2019, the parties concluded an employment contract (hereinafter: the contract), valid as from the date of its signature until 30 June 2022.

2. In accordance with clause 3.4 of the contract, the club undertook to pay to the player a monthly salary of Kenyan Shilling (KSH) 132,400 (approx.: USD 1,210).

3. In the first page of the contract, the following is handwritten: “400,000 KSH Four Hundred Thousands Kenyan Shillings”.

4. Clause 14 (Dispute Resolution) of the contract provides the following: “14.1 Amicable Settlement. The parties shall use their best efforts to settle amicably any dispute arising from or in connection with this Agreement or the interpretation thereof. 14.2 Arbitration. If the dispute has not been settled amicably within thirty (30) days from when the dispute resolution process was instituted, any Party may elect to commence arbitration. Any dispute that may arise regarding this contract or the interpretations of the terms and conditions thereof shall be formally reported in writing to the relevant FKF independent disciplinary body for arbitration. In case neither party is satisfied with the decision of such a body, then the matter will be referred to the next higher FKF body as per the existing structures. Please not this will not in any way deny of the parties in the dispute to follow the laid down justice machinery as provided in the Kenya constitution. Pending final settlement or determination of a dispute, the Parties shall continue to perform their subsisting obligations hereunder. Nothing in this agreement shall prevent or delay a Party seeking urgent injunctive or interlocutory relief in a court having jurisdiction”.

5. Clause 16 of the contract reads as follows: “i) Either party can terminate this agreement by giving one month’s notice or payment of one month salary in lieu of notice; ii) If the player’s performance is unsatisfactory, the club shall terminate the player’s contract by giving one calendar month notice or payment of one month’s salary in lieu of notice; iii) if the player fails to maintain the required levels of discipline and or violates the club’s Code of Conduct, the club shall terminate the player’s contract by giving one calendar month notice or payment of one month salary in lieu of notice; iv) the player shall be subjected to the Club’s Disciplinary Procedure before termination; v) if the player wishes to transfer his services to another club, KCF Football Club may release the player provided that the acquiring team shall pay to the club a transfer fees to be set by KCB Football Club; vi) notice to the player shall be sent to the player either in writing or to his agent (if any)”.

6. On 31 July 2020, the club orally informed the player that his contract had been terminated and, thereafter, on 3 August 2020, the club sent a termination letter to the player –dated 31 July 2020–, that the player did not agree to sign.

7. In particular, the termination letter stipulated the following: “[…] As you are aware, Covid-19 has negatively impacted the Kenyan economy and the global community at large. The negative impact has by extension affected the financial capabilities and support of KCB FC sponsors. This has in turn reduced the funds available to support and run the activities of KCB FC. In order to sustain the team and activities of KCB FC going forward, it has become necessary to reduce the number of players in the team from the current 30 to 24 players. In view of the above and based on the recommendation of the technical bench having considered your performance compared to other players in your current position as a Central Defender, we regret to advise that you have not been selected to form part of the 24 players whose services will be utilized next season (2020/2021). Consequently, we hereby notify you that your contract with KCF FC is accordingly terminated with effect from the date of this letter in line with clause 16 of y our contract. All amounts due to you including one month’s salary in lieu of notice will be paid to you in due course. […]”.

8. By means of his letter dated 6 August 2020 –sent on 7 August 2020–, the player informed the club about his non acceptance of the unilateral termination of the contract made by the club. In particular, the player held that “In any event, it is established jurisprudence that poor performance is not a just ground to be relied upon when terminating a contract of employment. You have further mentioned the actions you have taken are because of the impact of the COVID-19 pandemic on the club’s sponsors and the need to reduce the squad numbers. We are however informed that the club has only terminated the services of two players in the squad. […] No performance parameters have been provided to him alongside the termination letter to support this decision”.

9. Moreover, in the very same letter, the player stressed that the club failed to comply with art. 16 iv) of the contract, insofar “no consultations, meetings or disciplinary hearings to consider his termination have been held”. In this context, the player thereby put the club in default of payment in the amount of KSH 4,766,400, corresponding to a compensation for breach of contract, the payment of the liquidated damages clause and further damages, granting the club a 10 days’ deadline to remedy the default; however, to no avail.

10. In his request for relief, the player requested to be awarded compensation for breach of contract in the amount of KSH 3,045,200 (approx.: USD 27,767), corresponding to the residual value of the contract, as from 1 August 2020 until 30 June 2022, i.e. 23 monthly salaries of KSH 132,400 each; plus 5% interest p.a. “on all outstanding duties”.

11. In his claim, the Claimant firstly argued that he always complied with his contractual obligations and, in particular, “took part and performed his best abilities at official and friendly matches as well as training sessions and any other activities related to the employment relationships between the Respondent and himself”.

12. Furthermore, the Claimant stressed that the Respondent unilaterally terminated the contract without just cause, contravening the principle of contractual stability, on the grounds of the economic situation created upon the Covid-19 pandemic, which –according to the Claimant– is an excuse, insofar the Respondent allegedly “did not touch the other players thus confirming malice on the part of the Respondent”.

13. The Respondent, on its part, replied to the claim on 29 September 2020, i.e. one day outside of the deadline granted to it to reply to the claim.

14. As to the competence, the Respondent referred to clause 14 of the contract and argued that the Claimant “has failed to refer the dispute, if any, to the proper forum, namely, the FKF Independent Disciplinary Body for arbitration”. On the basis that the present dispute shall be dealt by the said deciding body, the Respondent requested the claim of the Claimant to be declared inadmissible.

15. As to the substance, the Respondent argued that the contract of the player was terminated without just cause, since the Respondent acted in accordance with clause 16 lit i) of the contract, insofar the Respondent “exercised the option of paying [the player] one [monthly] salary in lieu of notice”.

16. Moreover, the Respondent referred to its argument contained in the termination letter, in accordance with which, due to the covid-19 pandemic, the club went through a situation of financial distress, with reduced or no support from the sponsors, which led the club to terminate the contract of the Claimant, exercising clause 16 lit i) of the contract.

II. CONSIDERATIONS OF THE DISPUTE RESOLUTION CHAMBER JUDGE

1. First of all, the Dispute Resolution Chamber judge (hereinafter also referred to as DRC judge) analyzed whether she was competent to deal with the case at hand. In this respect, she took note that the present matter was submitted to FIFA on 21 August 2020 and submitted for decision on 4 November 2020. 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 DRC judge referred to art. 3 par. 1 and 2 of the Procedural Rules and confirmed that, in accordance with art. 24 par. 1 and 2 in combination with art. 22 lit. b) of the Regulations on the Status and Transfer of Players, the DRC judge is, in principle, competent to deal with the matter at stake, which concerns an employment–related dispute with an international dimension.

3. However, the DRC judge noted that the Respondent challenged the competence of FIFA to adjudicate on the present matter ex. clause 14 of the contract, which states, inter alia, the following: “Any dispute that may arise regarding this contract or the interpretations of the terms and conditions thereof shall be formally reported in writing to the relevant FKF independent disciplinary body for arbitration”. In this respect, the DRC judge noted that, although clause 14 of the contract may seem to be granting exclusive competence to the Football Kenya Federation, the Respondent failed to provide the necessary supporting documentation in order to demonstrate that the relevant arbitration body within the FKF complies with the mandatory requirements set in the FIFA circular no. 1010. In the absence thereof, the DRC judge determined that FIFA’s Dispute Resolution Chamber is, in principle, competent to deal with contractual disputes arisen between a Rwandan player and a Kenyan club, ex. art. 22 b) of the Regulations on the Status and Transfer of Players (June 2020 edition).

4. In addition and prior to all of the above, -continued the DRC judge- given that the Respondent replied to the club outside the deadline granted, its allegations challenging the competence of FIFA´s deciding bodies to deal with the present matter are to be disregarded, and the allegations of the Claimant, when sufficiently proved, are to be considered uncontested facts.

5. In continuation, the DRC judge analysed which regulations should be applicable as to the substance of the matter. In this respect, the DRC judge confirmed that in accordance with art. 26 par. 1 and 2 of the Regulations on the Status and Transfer of Players (June 2020 edition), and considering that the claim was lodged on 21 August 2020, the June 2020 edition of the aforementioned regulations (hereinafter: the Regulations) is applicable to the matter at hand as to the substance.

6. The competence of the DRC judge and the applicable regulations having been established, the DRC judge entered into the substance of the matter. In this respect, the DC judge started by acknowledging all the above-mentioned facts as well as the arguments and the documentation submitted by the parties. However, the DRC judge emphasised that in the following considerations she will refer only to the facts, arguments and documentary evidence, which it considered pertinent for the assessment of the matter at hand.

7. Having said that, the DRC judge acknowledged that, on 10 June 2019, the Claimant and the Respondent concluded an employment contract whereby the club undertook to pay to the player a monthly salary of Kenyan Shilling (KSH) 132,400 (approx.: USD 1,210).

8. Moreover, the DRC judge acknowledged that, on 21 August 2020, the player lodged a claim against the club before FIFA, requesting to be awarded compensation for breach of contract in the amount of KSH 3,045,200 (approx.: USD 27,767), corresponding to the residual value of the contract, as from 1 August 2020 until 30 June 2022, i.e. 23 monthly salaries of KSH 132,400 each; plus 5% interest p.a. “on all outstanding duties”.

9. In this context, the DRC judge noted that the Respondent only provided its position as to the claim lodged by the player against it on 29 September 2020, i.e. one day after the deadline granted to it to reply to the claim had expired. In this regard, the DRC judge referred to art. 9 para 3 (third sentence) of the Procedural Rules and emphasized that the arguments brought forward by the Respondent shall not be taken into account on the grounds of the said regulatory provision.

10. The above being clarified, the DRC judge stressed that It remained uncontested that the club unilaterally terminated the contract by means of its termination letter dated 31 July 2020, whereby the Respondent informed the Claimant about the unilateral termination of the contract, on the basis of Covid-19 pandemic in combination with the poor performance of the player.

11. In this context, explained the DRC judge, even though in its statement of defence the Respondent argues that it terminated the contract on the basis of clause 16 lit i) of the contract; as a matter of fact, the Respondent terminated the contract on the basis of clause 16 lit ii), i.e. the player’s unsatisfactory performance, in addition to the economic impact of Covid-19. What is more, the Respondent did not provide any evidence regarding the payment of one monthly salary, nor any proof of having given the Claimant a one month prior notice, which were the two conditions for the exercise of clause 16 lit i) of the contract.

12. Firstly, the DRC judge referred to clause 16 lit ii) of the contract, which she deemed null and void, insofar –in accordance with the well-established jurisprudence of the DRC– poor performance is not a valid reason to terminate a contract, since it relies on a discretional and subjective element, such as the player’s sporting performance, and since it can only be exercised by the club. Moreover, although the situation created upon the covid-19 pandemic does have an impact in the financial situation of clubs, clubs must respect the principle of contractual stability and follow the FIFA guidelines contained in the Covid-19 Football Regulatory Issues issued in April 2020 if they wished to terminate the contractual relationship with their players.

13. In this respect, the DRC judge highlighted that the unilateral termination of the contract, even under the difficult financial situation created upon the Covid-19 outbreak, is not valid, has no legal basis, and must be considered as made without just cause by the club.

14. In view of all of the above, the DRC judge established that the club terminated the contract without just cause on 3 August 2020 and is therefore liable to pay compensation for breach of contract to the player.

15. In this context, the DRC judge decided that, taking into consideration art. 17 par. 1 of the Regulations, the Claimant is entitled to receive from the Respondent compensation for breach on the basis of the relevant employment contract.

16. In this regard, the DRC judge 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.

17. In application of the relevant provision, the DRC judge held that she, 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 DRC judge established that no such compensation clause was included in the employment contract at the basis of the matter at stake.

18. In this regard, in the absence of a valid liquidated damages clause, the DRC judge determined that compensation must be calculated in accordance with the provisions of art. 17 of the RSTP. Subsequently, and in order to evaluate the compensation to be paid by the Respondent, the DRC judge 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 DRC judge noted that, since the contract was unilaterally terminated by the club on 3 August 2020, compensation shall in principle be equal to the residual value of the contract as from that moment until the original expiry of the contract, i.e. 30 June 2022. Hence, the DRC judge noted that the residual value of the contract amounts to KSH 3,045,200 (approx.: USD 27,767), i.e. 23 monthly salaries of KSH 132,400 each.

19. At this point, the DRC judge referred to art. 17 para 1 lit ii) of the Regulations, which stipulates that, in case the player signed a new contract by the tie of the decision, the value of the new contract for the period corresponding to the time remaining on the prematurely terminated contract shall be deducted from the residual value of the contract that was early terminated and shall, hence, be awarded a mitigated compensation.

20. In this context, the DRC judge remarked that, on 16 October 2020, the Claimant informed our services (information corroborated with the documentation available in TMS) that, on 29 September 2020, he concluded a new contract with the Rwandan club, Sunrise FC, valid as from 29 September 2020 until 28 September 2022, i.e. 2 years, whereby the player was able to mitigate his damages.

21. In this respect, the DRC judge observed that, in accordance with the new contract, the Claimant was entitled to a sign-on fee that amounts to RWF 4,000,000 (KSH 435,433) and to a monthly salary of RWF 350,000 (KSH 38,100).

22. In view of the above, the DRC judge established that –during the overlapping period– i.e. as from 29 September 2020 until 30 June 2022 (21 months), the player was able to mitigate his damages in an amount equal to KSH 1,235,533 [435,433 + (38,100*21) = 1,235,533].

23. Thus, the DRC judge concluded that the player shall be entitled to a mitigated compensation that amounts to KSH 1,809,667 (approx.: USD 16,510) [3,045,200 – 1,235,533 = 1,809,667], which is considered by the DRC judge to be a reasonable and justified amount as compensation.

24. In addition, taking into account the Claimant’s claim and the longstanding jurisprudence of the DRC judge in this respect, the latter decided to award the Claimant interest of 5% p.a. as from the date on which the claim was lodged, i.e. 21 August 2020, until the date of effective payment.

25. Furthermore, taking into account the consideration under number II./5. above, the DRC judge referred to para. 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.

26. In this regard, the DRC judge 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.

27. 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.

28. Finally, the DRC judge 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.

29. The DRC judge concluded his deliberations in the present matter stipulating that any further claim lodged by the Claimant is rejected. In conclusion, the Claimant’s claim is partially accepted.

III. DECISION OF THE DRC JUGE

1. The claim of the Claimant, Mugabo Gabriel, is partially accepted.

2. The Respondent, KCB FC, has to pay to the Claimant the amount of Kenyan Shilling (KSH) 1,809,667 as mitigated compensation for breach of contract, plus 5% interest p.a. as from 21 August 2020, until the date of effective payment.

3. Any further claim of the Claimant is 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 DRC judge:

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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