DECISIONI DI GIUSTIZIA SPORTIVA • F.I.F.A. - CAMERA DI RISOLUZIONE DELLE CONTROVERSIE - CONTROVERSIE DI LAVORO

• Data decisione: 29 settembre 2020 • Stagione sportiva: 2020/2021

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 Ivan Pesic

COMPOSITION:

Omar Ongaro (Italy), Deputy Chairman

Roy Vermeer (the Netherlands), member

José Luis Andrade (Portugal), member

CLAIMANT:

Ivan Pesic, Croatia

Represented by Mr Mikhail Prokopets

RESPONDENT:

FC Kaysar, Kazakhstan

I. FACTS

1. On 29 January 2020, the parties concluded an employment contract (hereinafter: the contract) valid as from 1 February 2020 until 13 November 2020.

2. According to the contract, the Respondent undertook to pay the Claimant a monthly salary of Kazakhstan Tenge (KZT) 7,300,000, payable “by no later than the 10th day of the following month”.

3. According to clause 1.1 of the contract: “The employee has the right to seeking a resolution of an individual labour dispute consistently legal bodies (Chamber of Dispute Resolution and Appeals Committee) ULPA Association Football Federation of Kazakhstan”.

4. According to clause 2.1 and 2.1.7 of the contract: “The employee has the right to seeking a resolution of an individual labour dispute consistently legal bodies (Chamber of Dispute Resolution and Appeals Committee) ULPA Association Football Federation of Kazakhstan”.

5. According to clause 2.4 and 2.4.1 of the contract: “The employer has the right to change, amend, suspend and terminate the present contract of employment in the manner and on the grounds established by the Code”.

6. According to clause 4.2 and 4.2.4 of the contract: “For the commission of a disciplinary offense employee an employer may apply the following disciplinary sanctions:

4.2.4 termination of an employment contract by the employer on the grounds stipulated by the Code”.

7. According to clause 7.1.3 of the contract: “The grounds for termination of the employment contract are: 7.1.3 termination of the contract by the employer on the grounds and in the manner stipulated by the Code”.

8. According to clause 11.2 of the contract: “This contract of employment (as well as the collective agreement, in case of its conclusion is the sole agreement governing the employment relationship between the parties”.

9. According to clause 12.3 of the contract: “All relationships between the Parties covered by this employment contract shall be governed by the Code, statutory FPC PFKL, the FIFA and UEFA”.

10. On 4 May 2020, the Respondent notified the player that his salary would be decreased “to 30% as from 1 May 2020”. In said correspondence, the club requested the player, should he agree to continue to work under the “new conditions”, to sign an additional agreement, reflecting such decrease, until 15 May 2020.

11. On 12 May 2020, the Claimant rejected to sign an additional agreement and referred to his current contract.

12. On 14 May 2020, the Respondent notified the player that his contract would be terminated if he rejected to sign an additional agreement.

13. The Club issued a notice on 15 May 2020 with the following contents:

“Hereby we notify you that the employment contract # 32 dd. January 29, 2020 concluded with you, will be terminated from May 15, 2020 as per subitem 2, article 58 of the Labor Code of the Republic of Kazakhstan (reason of the termination in case of refusal to continue the contract), in relation to Employer's refusal to continue the labor relations under changing of labor terms.”

14. On 15 May 2020, the Claimant sent a letter to the respondent indicating, inter alia, the following:

“I inform you that I totally disagree with such unilateral termination by the Club and draw your attention to the provisions of the FIFA Regulation on the Status and Transfer of Players (…)

Thus, in order not to be sanctioned by the FIFA Dispute Resolution ChamberI demand that the Club pay me the amount equal all debts of the Club, existing on the termination date together with the compensation for the termination in the amount of the residual value of the Contract within fifteen (15) days upon receiving this letter.”

15. On 21 May 2020, the Respondent replied to the Claimant as follows:

“Thus, as per the article 46 of the Labor Code of the Republic of Kazakhstan

You were offered to sign an additional agreement concerning changing of work terms but we got refusal from your side to continue the work in connection with terms changing.

According to abovementioned, the employment contract with you was terminated from May 15 2020 under subitem 2, item 1 of article 58 of the Labor Code of the Republic of Kazakhstan {the employment contract with employee must be terminated when employee refuses to continue the work relation), as well as to approved regulation of Kazakhstan Football Federation ,article 1 "About early termination of the employment contract under valid reason” (the employment contract concluded between the club and player can be terminated by either party a per bases provided by Labor legislation of the Republic of Kazakhstan.”

16. On 3 August 2020, the Player and the Ukrainian club, FC Vorskla, signed an employment contract valid as from the same date until 30 June 2022. Under such contract the player is entitled to a monthly salary of USD 1,245.

17. On 4 June 2020, the player lodged a claim before FIFA for breach of contract without just cause.

18. In his claim, the player maintained that the Respondent had no just cause to terminate the contract due to the player’s refusal to enter into an amended agreement.

19. In this context, the Claimant held that, if agreed to the proposed amendment, he would have earned KZT 2,190,000 instead of the contractually agreed amount of KZT 7,300,000 per month.

20. Furthermore, the Claimant argued that FIFA regulations prevail over national law.

21. As a consequence, the Claimant requested compensation for breach of contract in the amount of the residual value of the contract calculated as of 15 May 2020 until 13 November 2020, i.e. KZT 43,440,983.

22. In its reply to the claim, the Respondent argued that it “does not question the competence and authority of FIFA considering issues connected with legal disputes regarding registered football entities”. Additionally, the Respondent claimed that it “respects the principles of FIFA, recognizes and confirms compliance with the regulatory documents of FIFA, and is acquainted with the international aspect of the settlement of disputes specified in Article 22 lit. B) FIFA Regulation on the statuses and transitions (sic) of players”

23. However, the Respondent explained that it is affiliated to the Kazakhstan Football Federation (KFF), and while referencing the KFF Disciplinary Rules, and claimed that “The legal body of KFF is the Dispute Resolution Chamber of KFF, which considers disputes arising between the football clubs, players, and other football entities applying disciplinary sanctions for violation of these rules“.

24. Moreover, the Respondent referenced clauses 2.1.17, 2.4.1, 4.2.4, 7.1.3 and 11.2 of the employment contract (cf. section below), and submitted that entities registered in KFF (Clubs, players with professional status, etc.) are required to comply with the procedure for pre-trial settlement of disputes at the level of national Associations. (…) Accordingly, the first instance of the consideration of labor (and other disputes) is the competence of the KFF DRC”.

25. Additionally, the club submitted that under art. 22 RSTP “the parties may make a written decision in favour of such a dispute being settled by an independent arbitration tribunal established at the national level as part of an association and or collective agreement. Any arbitration clause must be included either directly in the contract or in the collective agreement applicable to the two parties. In this case, all of the above facts and circumstances are subject to more thorough investigation and consideration”.

26. Lastly, the club argued that “this dispute is a civil matter, since it is subject to consideration in the courts of general jurisdiction in the Republic of Kazakhstan, as it concerns issues, the protection of the Club and compliance with the laws of the Republic of Kazakhstan”.

27. In this respect, the Respondent has argued that it does not deem necessary to translate the KFF regulations, since “The KFF's regulatory documents are freely available on the website of the [KFF]”.

28. The club explained that the local government declared a “state of emergency” due to the COVID pandemic. The club also explained that the pandemic cause all competitions to be suspended.

29. In continuation, the club argued that the player, as a foreign citizen, must abide by the “Law on Migration of the Population” and the local legislation. Accordingly, the Respondent argued that the Kazakh Labour Code entitled the club, as the employer, to change the working conditions, which is did.

30. The club furthermore argued that since the player refused to accept a change in the working conditions, the club terminated the contract. The club deems to be entitled to do so under the Labour Code, and deems that such entitlement is just cause under art. 14 (1) of the RSTP for the termination of the contract.

31. Lastly, the club argued that due to the pandemic it sustained an income loss due to budget reduction by the club’s ownership, allegedly the City Administration of the Kyzylorda region. The Respondent further argued that the all players and coaching staff “have shown understanding and signed an Additional Agreement to reduce wages”.

32. The club did not make any specific request for relief and submitted that “For its part, the Club in defense of its interests sends this objection to the statement of the Claimant”.

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 in principle competent to deal with matters which concern employment-related disputes with an international dimension between players and clubs, such as the present one, which involves a Croatian player and a Kazakh club.

3. However, the Dispute Resolution Chamber noted that, in its reply, the Respondent apparently challenged the competence of FIFA by referring to clauses 2.1.17, 2.4.1, 4.2.4, 7.1.3 and 11.2 of the contract that is at the basis of the present dispute.

4. In relation to the above, the Chamber deemed it vital to outline that one of the basic conditions that needs to be met in order to establish that another organ than the DRC can settle an employment-related dispute between a club and a player of an international dimension, is that the competence of the relevant arbitration tribunal, respectively national court, derives from a clear reference in, inter alia, the employment contract at the basis of the dispute.

5. Therefore, while analysing whether it was competent to adjudicate the present matter, the Dispute Resolution Chamber considered that it should, first and foremost, analyse whether the employment contract at the basis of the present dispute actually contained a clear and exclusive jurisdiction clause in favour of a specific court or decision-making body.

6. In this respect, after duly examining the contents of the contract that is at the basis of the present dispute, the Chamber observed there is no clear and exclusive jurisdiction clause in the contract in favour of the Kazakh NDRC, or in favor of a state court.

7. In addition, the DRC noted that the clauses referenced by the Respondent (clauses 2.1.17, 2.4.1, 4.2.4, 7.1.3 and 11.2) either have no connection to the issue of competence, or are clauses that revert to choice of law. Moreover, the Chamber underlined that it is noticeable that clause 12.3 of the contract references FIFA.

8. In view of all of the above, the DRC confirmed that it is competent to hear over the present dispute.

9. 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 4 June 2020, the June 2020 edition of the aforementioned regulations (hereinafter: the Regulations) is applicable to the matter at hand.

10. 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.

11. In this respect, the Chamber noted that, on 29 January 2020, the parties concluded an employment contract (the contract) valid as from 1 February 2020 until 13 November 2020.

12. Subsequently, the Chamber observed that the Claimant lodged a claim before FIFA for breach of contract without just cause, arguing that the Club terminated the contract without just cause by issuing a notice on 15 May 2020 with the following contents:

13. Conversely, the Chamber noted that, for its part, the club, confirmed said early termination of the contract, noting that, in view of the COVID-19 pandemic and its economic effects, the player refused to accept a change in the working conditions. In this respect, the Chamber noted that the club confirmed that it terminated the contract and that it deems to be entitled to do so under the Labour Code, and argued that such entitlement is just cause under art. 14 (1) of the RSTP for the termination of the contract.

14. In view of the dissent between the parties, the members of the Chamber went on to observe whether the club terminated the contract with or without just cause.

15. In this respect, the Chamber was eager to emphasise that 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.

16. Within this context, the Chamber deemed of utmost importance to recall the main events that led to the early termination of the contract.

17. In particular, the Chamber noted that, on 4 May 2020, the Respondent notified the player that his salary would be decreased “to 30% as from 1 May 2020”. In said correspondence, the club requested the player, should he agree to continue to work under the “new conditions”, to sign an additional agreement, reflecting such decrease, until 15 May 2020.

18. Within this context, the Chamber noted that the player refused the aforementioned salary decrease, and that, in reply to said refusal, the Respondent notified the player that his contract would be terminated if he rejected to sign an additional agreement.

19. In this respect, the Chamber was well-aware of the specific circumstances concerning the effects of the COVID-19 pandemic.

20. In view of the above, the Chamber observed that it stands undisputed that the club at first tried to reduce the player’s salary, which was not accepted by the latter, and that the club then terminated the contract.

21. In light of the particular circumstances of the case and taking into special consideration the fact that the club presented the player with an amendment to the contract, the Chamber considered that the club’s behaviour in this respect cannot be considered as a unilateral variation of the contract, insofar the club invited the player to provide his consent.

22. However, after duly examining the circumstances at stake, the Chamber observed that the club’s attempt to reach an agreement seemed rather confrontational, considering that the player was under threat of dismissal if he failed to accept the club’s conditions. Yet, the Chamber observed that, ultimately, no agreement was reached, since the player refused the conditions proposed by the club.

23. Within this context, the Chamber noted that in any case the player did not refuse to continue his employment relation but rather rejected an offer of a substantial reduction in his remuneration. With this idea in mind, the Chamber was of the opinion that the Respondent’s reaction to the player’s refusal to an initial offer, i.e. to unilaterally terminate the contract, was disproportionate in the light of the principle of ultima ratio.

24. In addition, the Chamber observed the club argued that due to the pandemic it sustained an income loss due to budget reduction by the club’s ownership, allegedly the City Administration of the Kyzylorda region.

25. In this respect, the Dispute Resolution Chamber reminded the parties of the contents of art. 12 par. 3 of the Procedural Rules, according to which “any party claiming a right on the basis of an alleged fact shall carry the burden of proof”.

26. In application of the aforementioned principle, the Chamber noted, however, that the Respondent failed to provide clear and specific evidence in support of said allegation.

27. All in all, the Chamber referred to its longstanding jurisprudence as well as to the COVID-19: Football Regulatory Issues document, and unanimously established that the unilateral termination of the contract by the club was without just cause and disproportionate considering the established fact. As a result, the Chamber understood that the Claimant is entitled to compensation.

28. 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. 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.

29. In application of the relevant provision, the Chamber held that it firstly 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.

30. 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.

31. In this respect, the Chamber pointed out that at the time of the termination of the employment contract on 15 May 2020, the contract would run until 13 November 2020, and that the contract stipulated that the player was entitled to a total amount of KZT 46,963,333.33 (i.e. 7,300,000*6, from May 2020 to October 2020, plus KZT 3,161,333.33 for 13 days of November 2020).

32. In continuation, the Chamber verified as to whether the Claimant had signed an employment contract with another club during the relevant period of time, by means of which he would have been enabled to reduce his loss of income. According to the constant practice of the DRC, such remuneration under a new employment contract shall be taken into account in the calculation of the amount of compensation for breach of contract in connection with the player’s general obligation to mitigate his damages.

33. In this respect, the Chamber noted that, on 3 August 2020, the Player and the Ukrainian club, FC Vorskla, signed an employment contract valid as from the same date until 30 June 2022. Under such contract the player is entitled to a monthly salary of USD 1,245. Consequently, the Chamber understood that, from 3 August 2020 until 13 November 2020, the player would have earned the approximate amount of USD 4,357, equivalent to approx.. KZT 1,797,350.

34. In view of the above, the Chamber established that the mitigated compensation would correspond to KZT 45,165,983,33 (i.e. 46,963,333.33-1,797,350).

35. However, the Chamber noted that the Claimant limited his claim to KZT 43,440,983. Thus, in accordance with the principle of non ultra petita, the Chamber decided that it could not grant more than said amount as compensation.

36. As a result, the Chamber decided that the Respondent shall pay to the claimant, the total amount of KZT 43,440,983, as compensation for breach of contract without just cause, which it deemed as justified and reasonable on the basis of the applicable regulations, contracts and longstanding jurisprudence in this respect.

37. Moreover, taking into account the Claimant’s request as well as the longstanding jurisprudence in this respect, the Chamber decided to award 5% interest p.a. over said amount as from the date of the claim.

33. 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.

38. 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.

39. 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.

40. 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, Ivan Pesic, is admissible.

2. The claim of the Claimant is partially accepted.

3. The Respondent, FC Kaysar, has to pay to the Claimant the following amount:

- KZT 43,440,983 as compensation for breach of contract without just cause plus 5% interest p.a. as from 4 June 2020 until the date of effective payment.

4. Any further claims of the Claimant are rejected.

5. 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.

6. 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).

7. 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:

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).

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.

8. 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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