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 10 December 2020

Decision of the

Dispute Resolution Chamber

Passed in Zurich, Switzerland on 10 December 2020,

regarding an employment-related dispute concerning the player Christian Alberto Cueva Bravo

COMPOSITION:

Geoff Thompson (England), Chairman

Angela Collins (Australia), member

Abu Nayeem Shohag (Bangladesh), member

CLAIMANT / COUNTER-RESPONDENT:

SANTOS FC, Brazil

Represented by CCLA Advogados

RESPONDENT 1 / COUNTER-CLAIMANT:

CHRISTIAN ALBERTO CUEVA BRAVO, Peru

Represented by Jonathan Uriel Bensousan

RESPONDENT 2

CLUB PACHUCA, Mexico

I. FACTS OF THE CASE

1. On 7 February 2019, the Brazilian club, Santos FC (hereinafter: the club or Santos) and the Russian club, Krasnodar, entered into an agreement titled “Loan transfer agreement – with mandatory guaranteed purchase of player’s registration after the end of loan” (hereinafter: the transfer agreement) regarding the transfer of the Peruvian player, Christian Alberto Cueva Bravo (hereinafter: the player).

2. According to the transfer agreement, the player’s services were transferred first on a temporary basis from Krasnodar to Santos, and subsequently Santos undertook to the permanent transfer of said services against payment of a transfer fee of USD 7,000,000.

3. On 7 February 2019, Santos and the player concluded an employment contract (hereinafter: the contract) valid as from the same date until 31 December 2022.

4. According to the contract, Santos undertook to pay to the player a monthly salary of BRL 300,000.

5. Clause 4.1 of the contract read as follows (quoted verbatim):

“Clause Four - INTERNATIONAL SPORTS INDEMNIFICATION CLAUSE: -

4.1. According to article 28, section I, and §1 , section I of the Federal Law no. 9.615 / 98 and Clause Nine of federative contract of CBF, CLUB and ATHLETE establish on behalf of CLUB one Sports Indemnity Clause equivalent in Brazilian currency to EUR 100,000,000 (one hundred million euros) for the international transfer and other legal cases, including termination for breach of this contract by the ATHLETE and subsequent execution of employment contract with club abroad”.

6. Clause 7 of the contract read as follows (quoted verbatim):

“Clause Seven - PENALTY APPLICATION

Violation of any contractual provision or failure to comply with any of the obligations in this contract, applicable laws and / or Bylaws and Athlete’s Rules of Procedure implemented by CLUB or regulations of sports administration agencies (F IFA, CBF and FPF) authorizes CLUB to apply the penalties provided for in the legislation: -

Oral warning; -

Written warning; -

Suspension up to thirty (30) days without pay; -

Fine; -

Dismissal for Cause form CLUB’s athletes team.

Sole Paragraph. The penalties are applied according to the severity of the transgression. Recidivism is considered GROSS NEGLIGE CE to the employment contract subject of DISMISSAL punishment, and ATHLETE is liable for paying national sports indemnity clause on behalf of CLUB. The proper departments of the CLUB will analyze the seriousness of the offense and apply the penalties deemed the most appropriate.

7. Clauses 18 and 19 of the contract read respectively as follows (quoted verbatim):

“Clause Eighteen- BREACH OF CONTRACT BY THE ATHLETE: -

18.1. In the event non-compliance by the ATHLETE of any of the obligations set forth in this

Sport Special Work Agreement, CLUB should apply the penalty provided for in Clause Seven or terminate this agreement by fault of the ATHLETE, applying the Sports Indemnity Clause hereunder.

18.2. In the event of contractual termination by fault of the ATHLETE, he shall only be transferred to another national or foreign sports association after paying to SANTOS FUTEBOL CLUBE the amount of the respective Sport Indemnity Clause (3.l in case of transfer to a domestic sports association; 4.1 in case of transfer to a foreign association) according to article 28, §5, item II of Law 9.615 / 98.

Clause Nineteen- BREACH OF CONTRACT BY THE CLUB: -

19.1. If the CLUB delays the salary payment in whole or in part for a period equal to or longer than three months, the ATHLTE should terminate the Sports Special Employment Contract and federative contract of CDB, and is free to be transferred to any other association of the same modality, domestic or international and demand payment of the Sports Indemnity Clause provided for in Clause 4.1.

19.2. In accordance with art. 31, § l , of Law 9.615 / 98, the salary, for the effect of the heading of this Clause, should be understood as. the vacation bonus, thirteenth salary and other amounts that should be included herein and in the Sports Special Employment Contract .

19.3. The contumacious default will also be considered for non-payment of FGTS and social security contributions.”

8. On 7 February 2019, the player and the club executed a “Term of adjustment of contractual conditions for the exploration of professional athlete’s image rights” (hereinafter: Term of Adjustment), according to which the parties thereto agreed to the future execution of a “sublicensing agreement for the usage of personality rights of a professional football athlete and other covenants”, to be valid as from 7 February 2019 to 31 December 2022.

9. According to the second clause of the Term of Adjustment, the player undertook by 30 April 2019 to present Santos with the bylaws of the company that owed the rights of exploring his image, and that such company would appear as the hired company “in the respective contract to be executed”.

10. According to third clause of the Term of Adjustment, Santos undertook to pay the monthly amount of BRL 200,000 “by day 15 of the month subsequent to the exploration of the [player’s] image rights”, with the first payment due on “15 March 2018” (recte.: 15 March 2019).

11. The jurisdiction clause of the Term of Adjustment refers to the courts on the City of Santos with exclusive basis.

12. On 7 February 2019, the parties signed a side letter (hereinafter: the side letter), according to which the club undertook to pay to the player BRL 5,000 as “housing assistance” and provide him with 5 return plane tickets between Sao Paulo and Lima “during the term of the [contract].”

13. On 11 June 2019, Santos, the player and the Company “Christian Alberto Cueva Micro-Empresa” (hereinafter: the Company) concluded a “Contract of Sub-Assignment for use of publicity rights of professional soccer athlete and other covenants” (hereinafter: the Image Rights agreement), valid as from 11 June 2019 until 31 December 2022.

14. The Image Rights agreement, in its preamble, states that the player “assigned” to the Company the “right to use and explore” his image rights, as defined therein. The preamble further refers to the Term of Adjustment.

15. According to clause 6 of the Image Rights agreement, Santos undertook to pay to the Company 42 monthly and consecutive instalments, as follows:

a. BRL 960,000 by 25 June 2019;

b. 41 instalments of BRL 200,000 each due on the 15th day of the following months.

16. According to clause 6.2 of the Image Rights agreement, payments to would be subject to the issuance of the proper invoice by the Company.

17. According to clause 14.4 of the Image Rights Agreement, “This contract is accessory in nature and is a sine qua non condition for the efficacy and effectiveness of the [contract] entered into by and between Santos and [the player]. In case of early termination or suspension for the re-loan to a third party club of the [contract], this [Image Rights agreement] will not be effective and payments owed shall meet the provisions of sections 12 and 13 above”.

18. According to clause 14 of the Image Rights agreement, the jurisdiction for resolving disputes refers to the courts on the City of Santos on an exclusive basis.

19. On 16 January 2020, the player put the club in default for a payment of BRL 1,000,000 corresponding to five unspecified instalments agreed under the Image Rights agreement, plus BRL 60,000 as unspecified housing allowances requesting payment within 10 days. On the same date, Santos paid BRL 400,000 to the player.

20. On 19 January 2020, the club received an offer from the Argentinian club, CA San Lorenzo, to transfer the player on loan for one year before transferring the player permanently for a fixed fee of USD 4,000,000. The counter-offer of Santos was subsequently refused by CA San Lorenzo.

21. On 27 January 2020, the player terminated the contract with the club referring to his default notice and the outstanding payments, the fact that he had to train alone, and that he was not registered for a tournament.

22. On 31 January 2020, the Mexican club, Pachuca (hereinafter: Pachuca) and the player signed an employment contract valid for the Clausura 2020 tournament, i.e. as from 1 February 2020 until 31 May 2020, according to which the player was entitled to a total compensation of USD 400,000 (i.e. USD 100,000 per month).

23. On the same date, Pachuca contacted Santos and informed it that it had concluded an employment contract with the player and requested to issue the “Non-TPO declaration”.

24. On the same date, Santos paid BRL 200,000 to the player.

25. On the same date, Santos contacted the Confederação Brasiliera de Futebol (CBF) to clarify that the player was still contractually bound to Santos. Subsequently, the CBF rejected the issuance of the player’s International Transfer Certificate (ITC).

26. On 13 February 2020, after the request for intervention from the Federación Mexicana de Fútbol Asociación (FMF), the Single Judge of the Players’ Status Committee allowed the provisional registration of the player with Pachuca.

27. On 1 September 2020, the player and the Turkish club Yeni Malatyaspor signed an employment contract valid as from the same date until 31 May 2021, according to which the player is entitled to a total remuneration of EUR 896,500, plus bonuses for performance.

II. PROCEEDINGS BEFORE FIFA

28. On 8 June 2020, Santos filed the claim at hand before FIFA against the player and Pachuca. A brief summary of the position of the parties is detailed in continuation.

a. The claim of Santos

29. In its claim, Santos maintained that the player did not have just cause to terminate the contract on 27 January 2020.

30. In this context, Santos held that all outstanding dues resulting from the Image Rights agreement, to which the default notice related to, were paid before the termination.

31. Furthermore, the Claimant held that the tournament the player referred to was not an official tournament under the auspices of the CBF but that in any event there was no deregistration of the player taking place.

32. Santos held that the player was induced by Pachuca to breach the contract and that he has to pay compensation for breach of contract while Pachuca should be held jointly and severally liable.

33. In this regard, Santos referred to the “penalty clause” in the contract and held that the parties agreed upon an amount of EUR 100,000,000 for the player’s breach of contract.

34. Alternatively, in case such penalty would not be applied, Santos requested payment compensation for breach of contract of USD 8,565,145, broken down as follows:

a. Value of lost services corresponding to the residual value of the contract: USD 10,820,000;

b. Minus USD 2,602,000 as salaries and house allowances that Santos would save, arriving at USD 8,218,000

c. Minus one year of the amortised transfer fee paid to Krasnodar;

d. Plus six monthly salaries USD 426,580);

e. Plus USD 1,750,000 as “replacement costs”.

35. Santos requested the following relief (quoted verbatim):

“FIRST - To uphold in full the present claim;

SECOND - To confirm that the Player, induced by Pachuca, terminated the Employment Contract unilaterally and without just cause during the so-called “Protected Period”;

THIRD - To order the Player to pay to the Club EUR 100,000,000 (one hundred million dollars) due as compensation, plus default interest at rate of 5% annually as from 28 January 2020 until the effective date of payment (cf. Art. 17, par. 1 and par. 2 of the FIFA RSTP);

Alternatively and only if the above is rejected:

THIRD - To order the Player to pay to the Club USD 8,565,145 (eight million five hundred sixty five thousand one hundred and forty five dollars) due as compensation , plus default interest at rate of 5% annually as from 28 January 2020 until the effective date of payment (cf. Art. 17, par. 1 and par. 2 of the FIFA RSTP);

FOURTH - To confirm the Jointly and severally liability of Pachuca in the payment to the Club the aforementioned compensation amount (cf. Art. 17, par. 2 of the FIFA RSTP);

FIFTH - To impose sporting sanctions on the Player, notably, a six-month sanction on playing any official matches (cf. Art. 17, par. 3 of the FIFA RSTP);

SIXTH - To impose sporting sanctions on Pachuca, notably, its ban from registering any new players (professional or amateurs) either nationally or internationally, for 2 (two) entire and consecutive registration periods (cf. Art . 17, par. 4 of the FIFA RSTP); and

SEVENTH - To open the necessary proceedings, by notifying the Player and Pachuca immediately via FMF or through the data set out in the FIFA Transfer Matching System (cf. Art. 6, par. 3 of the FIFA Procedural Rules)”.

b. Position of the player

36. The player rejected Santos’ claim and filed a counterclaim against the club.

37. The player argued that in spite of his requests that the club paid his salary (BRL 500,000), Santos demanded that 40% of such amount be paid as image rights, purportedly to avoid payment of taxes. To this end, the player argued that Santos took almost 5 months to pay the player his monthly image rights remuneration (BRL 200,000) since this amount pertained to a previous image rights contract signed on 6 February 2020. The player further claimed that Santos made him sign a pre-dated image rights agreement.

38. The player argued that Santos never paid him the monthly BRL 5,000 agreed in the side letter, and that payment delays were frequent in the club, something that had also happened to other players. The player also argued that the financial situation was so complicated that it prompted an impeachment process of the club’s president.

39. The player lodged a counterclaim and argued that it put the club in default on 16 January 2020, to no avail, reason why he terminated the contract on 27 January 2020. The player argued that following his first default notice he was put to train with the reserve squad, which also entitled him to terminate the contract.

40. In continuation, the player rebutted Santos’ claim that it had received offers from third clubs.

41. The player requested USD 3,344,996 as “salaries for breach of contract” without indicating a breakdown.

c. Position of Pachuca

42. On 30 June 2020, Pachuca was invited by FIFA to file its position to the claim of Santos by no later than 20 July 2020. Pachuca did not reply to the claim within the deadline granted.

43. On 10 September 2020, the FIFA Administration informed the parties that no response had been filed by Pachuca.

44. Notwithstanding, on 11 September 2020, Pachuca filed a request for a deadline extension to file its reply, which was denied by the FIFA Administration since such request was filed after the relevant deadline had expired.

45. Ultimately, Pachuca filed an unsolicited statement of defence on 21 October 2020.

d. Reply to the counterclaim by Santos

46. Santos firstly outlined that the player had failed to produce a translation of the evidence filed as annexes 3, 4, 17 and 22. It also argued that the player failed to produce any evidence to set aside its claim. In this respect, the club argued that “Any financial difficulty that [Santos] was facing at the time of the Termination Letter sent by the Player is not able to substantiate the early termination carried out by the Player, especially considering the only argument used by him in the abovementioned Letter dated of 27 January 2020: “deregistration”.

47. To this end, Santos explained that the player was never de-registered and argued that there is a difference between the registration, which is conducted by the CBF, and the eligibility to play in regional competitions, i.e. those organized by the local federations, affiliated to the CBF. The club went on to explain that the player was not called for one match of the Campeonato Paulista, but that he was eligible and registered to play in such competition as his registration was duly issued by the CBF on 7 February 2019.

48. In continuation, Santos argued that the Image Rights agreement was only signed on 11 June 2019, whereas the employment contract was executed on 7 February 2019. In this regard, the club denied that the Image Rights agreement had the purpose to avoid paying taxes; it explained that such constellation is authorized by national law and constitutes a common and licit practice in Brazilian football.

49. The club went on to explain that “Also, on 07th February 2019, the Player and the Club signed the “Term for Adjustment of the Future Conditions of the Image Rights Agreement” (Exhibit 18 of Player´s Counterclaim, hereinafter referred to as the “Term of Adjustment”) defining the conditions for the execution of the Image Rights Agreement”, according to which “In this document it was agreed by both parties that the Image Rights Agreement would only be signed after the Club´s receipt of the Player´s company bylaws proving the existence of the company authorized to exploit the Player´s image right (clause 2 of the Term of Adjustment). Also, this clause set that this obligation should be achieved by 30th April 2019”. The club explained that the player however only presented such bylaws in June, hence why the execution of the Image Rights agreement on the 11th day of that month.

50. Subsequently, Santos explained that the player is not a party to the Image Rights agreement, only the Company and the club, and that the jurisdiction clause in such contract refers to the local courts of the city of Santos, hence “the competence of the decision-making bodies of FIFA was expressly declined by the parties when expressly indicated the courts of the city of Santos”. The club pointed out that the termination of the contract had no connection to the employment agreement.

51. In any event, Santos outlined that in accordance with clauses 6.2 of the Image Rights agreement, the Company was to issue the pertinent invoices before payment, and that it had failed to timely do so. It also argued that the default notice sent by the player gave a short deadline of only 10 days, moreover if considering the day that the invoices were issued.

52. Nevertheless, it argued that only four days after having received these invoices, it paid the amount dues, missing only BRL 600,000. Accordingly, Santos was of the position that “assuming but not admitting, that there was no need (i) to put the Club under default of payment, (ii) respect the 15-day time limit and (iii) both contracts (employment and image) shall be interpreted as one, the alleged outstanding amount was not substantial enough to grant the Player the right to terminate such employment relationship unilaterally”.

53. Santos requested that the counterclaim be dismissed.

e. Request for additional documentation by FIFA

54. In order to complete the information on file and with reference to the last sentence of art. 9 par. 4 of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber, the FIFA Administration requested that Santos and the player respectively filed translation of certain documents, all of which pertained to invoices sent by the Company and payments allegedly made by Santos. Both parties timely complied with such request.

III. CONSIDERATIONS OF THE DISPUTE RESOLUTION CHAMBER

a. Competence and admissibility

55. First of all, the Dispute Resolution Chamber (hereinafter also referred to as Chamber or DRC) analysed whether it was competent to deal with the case at hand. In this respect, it took note that the present matter was presented to FIFA on 8 June 2020 and submitted for decision on 10 December 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.

56. Subsequently, the members of the Chamber referred to art. 3 par. 1 of the Procedural Rules and observed that in accordance with art. 24 par. 1 in combination with art. 22 lit. a) and b) of the Regulations on the Status and Transfer of Players (edition October 2020, the Dispute Resolution Chamber is in principle competent to deal with the matter at stake, which concerns an employment-related dispute with an international dimension between a Peruvian player, a Brazilian club, and a Mexican club.

57. Nonetheless, the Chamber took note of the fact that Santos objected to the competence of FIFA to hear the counterclaim lodged by the player on the grounds that the parties had elected the courts of the City of Santos, Brazil, to resolve disputes concerning the Image Rights agreement.

58. In this respect, the Chamber referred to clause 14.4 of the Image Rights agreement and noted that its unequivocal wording established that such agreement is an accessory to the contract. Hence, in line with the principle that the accessory follows the principal, and bearing in mind that the contract does not possess any jurisdiction clause, the DRC confirmed that it is competent to hear the dispute.

59. It follows that the counterclaim of the player is admissible.

60. Notwithstanding the above, the Chamber was observant of the fact that Pachuca, after having been granted a deadline until 20 July 2020 to file his position, did not file any submissions by such deadline.

61. Thereafter, following the confirmation on 10 September 2020 by the FIFA Administration that no reply had been received from Pachuca, said club:

a. On 11 September 2020, submitted a request that a new deadline was set for it to file its position; and

b. On 21 October 2020, filed an unsolicited statement of defence.

62. Bearing in mind the foregoing, the DRC deemed it necessary to assess the admissibility of the correspondences filed by Pachuca.

63. By doing so, the DRC confirmed that the correspondence sent by the FIFA Administration on 30 June 2020 – whereby Pachuca was invited to file its position – was sent to the e-mail addresses indicated by Pachuca in TMS. Additionally, the Chamber recalled the contents of art. 9bis par. 3 of the Procedural Rules, according to which “Communications from FIFA shall be sent to the parties in the proceedings by using the email address provided by the parties or as provided in the Transfer Matching System (TMS; cf. art. 4 par. 1 of Annexe 3 and art. 5 par. 2 of Annexe 3 of the Regulations on the Status and Transfer of Players)”. The email address provided in TMS by associations and clubs is considered a valid and binding means of communication”.

64. Moreover, the DRC referred to the last sentence of the cited article, and confirmed that it is a duty of Pachuca to “ensure that their contact details (e.g. address, telephone number and email address) are valid and kept up to date at all times”.

65. Consequently, the DRC firmly established that Pachuca had been properly summoned to the proceeding at hand for the letter dated 30 June 2020 sent by FIFA was addressed to a valid and binding means of communication, i.e. the e-mail addresses indicated by Pachuca itself on TMS. The DRC highlighted that these electronic addresses were the same ones used throughout the proceedings in all further correspondence exchanged with said club.

66. In continuation, the Chamber noted that it stood undisputed that Pachuca had not sent any submissions to FIFA by 20 July 2020.

67. Accordingly, the DRC found that the FIFA Administration acted correctly on the basis of art. 9 par. 3 of the Procedural Rules by acknowledging the lack of response of Pachuca, and subsequently not granting the latter a new deadline on 11 September 2020. The DRC arrived at such decision considering that Pachuca had failed either to adequately request a deadline extension in accordance with article 16 par. 11 of the Procedural Rules, or to timely file its position.

68. On account of the foregoing, the DRC concluded that the correspondences of Pachuca filed after 20 July 2020 were filed late and thus are inadmissible.

b. Applicable legal framework

69. Subsequently, the Chamber analysed which regulations should be applicable as to the substance of the matter. In this respect, it confirmed that, in accordance with art. 26 par. 1 and 2 of the Regulations on the Status and Transfer of Player (edition October 2020), and considering that the present claim was lodged on 8 June 2020, the June 2020 edition of said regulations (hereinafter: the Regulations) is applicable to the matter at hand as to the substance.

c. Burden of proof

70. The Chamber recalled the basic principle of burden of proof, as stipulated in art. 12 par. 3 of the Procedural Rules, according to which a party claiming a right on the basis of an alleged fact shall carry the respective burden of proof. Likewise, the DRC stressed the wording of art. 12 par. 4 of the Procedural Rules, pursuant to which it may consider evidence not filed by the parties.

71. In this respect, the Chamber also recalled that in accordance with art. 6 par. 3 of Annexe 3 of the Regulations, FIFA’s judicial bodies may use, within the scope of proceedings pertaining to the application of the Regulations, any documentation or evidence generated or contained in TMS.

d. Merits of the dispute

72. The competence of the DRC and the applicable regulations having been established, the DRC entered into the merits of the dispute. In this respect, the DRC started by acknowledging all the above-mentioned facts as well as the arguments and the documentation on file.

73. In this respect, the DRC wished to briefly remark that the documentation and submissions filed by the parties were sometimes contradictory and lacking pieces of information.

74. In any event, the DRC emphasised that in the following considerations it will refer only to the facts, arguments and documentary evidence, which it considered pertinent for the assessment of the matter at hand.

i. Main legal discussion and considerations

75. The foregoing having been established, the Chamber moved to the substance of the matter, and took note of the fact that the parties strongly dispute whether the player terminated the contract with or without just cause, and the consequences thereto. In order to determine the existence or not of just cause, the DRC confirmed that it had to address the following issues:

a. What amounts were owed to the player by 16 January 2020, the day of the default notice?

b. What amounts were owed to the player by 27 January 2020, the day of the termination of the contract?

c. Did the player correctly put the club in default?

d. Was the player de-registered by the club?

e. What are the consequences of the foregoing considerations?

76. These questions are addressed in continuation.

1. What amounts were owed to the player by 16 January 2020?

77. The DRC started by observing that the default notice sent by the player on 16 January 2020 refers to five unpaid image right fees and BRL 60,000 as housing, both which were not accompanied by a specific breakdown explaining to which months they referred to.

78. In this respect, the DRC noted that the housing allowance was payable by the end of each calendar month as no due date had been established in the side letter. Hence, by 16 January 2020, the housing allowance of that month was not yet due. Equally, the DRC underlined that monthly fees arising from the Image Rights agreement were payable every 15th day of the following month.

79. From clause 6.2 of the Image Rights Agreement, the DRC recalled that payment was subject to the issuance of invoices. Copies of the following invoices issued by the Company were found on record:

a. Referring the months of February to May 2019, all of which are not disputed by the parties;

b. Referring to the month of October 2019, issued on 20 January 2020, the payment of which was contractually due on 15 November 2019;

c. Referring to the month of November 2019, issued on 20 January 2020, the payment of which was contractually due on 15 December 2019;

d. Referring to the month of December 2019, issued on 20 January 2020, the payment of which was contractually due on 15 January 2020.

80. Having the foregoing in mind, the Chamber observed that the amounts regarding September and October 2020 are not disputed by Santos (cf. para. 41 and 124 of the statement of claim).

81. The Chamber furthermore observed that by 16 January 2020 the Company had not issued the invoices regarding November 2019 and December 2019; these invoices were only issued on 20 January 2020.

82. Consequently, the Chamber concluded that the player was incorrectly trying to collect his remuneration of January 2020 with his default notice; hence, the amounts that had already fallen due were as follows: (a) housing allowances between February and December 2019 amounting to BRL 55,000 (i.e. 11 months à BRL 5,000 each); (b) Image Rights fees between September and December 2019 amounting to BRL 800,000 (i.e. 4 months à BRL 200,000 each. The Chamber highlighted that nowhere in the submission either by Santos or by the player reference is made to payments due in August 2019.

83. However, is spite of the fact that the relevant due dates had already elapsed, the DRC held, in line with the principles of pacta sund servanda and exceptio non adimpleti contractus, that because the Company had not issued any invoices as to the payments of November and December 2019, that these payments cannot be considered as outstanding on the date of the player’s default notice.

84. The Chamber thus determined that on 16 January 2020 the remuneration of BRL 455,000 had been unpaid by Santos (i.e. 2 image rights fees of September and October plus 11 housing allowances). Since the monthly remuneration of the player amounted to BRL 505,000, the Chamber stressed that the outstanding amount does not correspond to more than two salaries.

2. What amounts were owed to the player by 27 January 2020?

85. In continuation, the Chamber noted, in spite of the contradictory allegation by Santos itself that payment had been made four days after the player’s default notice, that on 16 January 2020 Santos paid BRL 400,000 to the player as per the evidence on file.

86. Additionally, as established above, the Chamber confirmed that on 20 January 2020 the Company issued other invoices (referring to October, November, and December 2019), amounting to BRL 600,000. The Chamber stressed that the amount of October 2020 is not disputed by Santos, and that the January 2020 instalment of the image rights fee was only payable on 15 February 2020.

87. Consequently, the total amount that remained outstanding on 27 January 2020 was still BRL 455,000, which corresponded to four image rights fees (total of BRL 800,000) plus 11 housing allowances (total of BRL 55,000) minus the amount paid by Santos (BRL 400,000).

3. Did the player correctly put the club in default?

88. By his correspondence dated 16 January 2020, the player awarded only 10 days for the club to cure its breach. The DRC noted furthermore that the player expressly mentioned art. 12bis of the Regulations in his default notice.

89. In this respect, the DRC recalled the contents of article 14bis of the Regulations, which inter alia states that “In the case of a club unlawfully failing to pay a player at least two monthly salaries on their due dates, the player will be deemed to have a just cause to terminate his contract, provided that he has put the debtor club in default in writing and has granted a deadline of at least 15 days for the debtor club to fully comply with its financial obligation(s)”.

90. Consequently, the DRC established, under the narrow margin which is enshrined in the cited rule and in line with the jurisprudence of the DRC, that the player did not fulfil the requisites of art. 14bis of the Regulations.

4. Was the player de-registered by the club?

91. With respect to the matter of the de-registration, the DRC emphasized that the player filed no evidence in support of his allegations that Santos had excluded him from the team’s roster, or, equally, that he had been put to train on a separate schedule after his default notice.

92. What is more, the DRC observed that from the evidence submitted by Santos, it is clear that the player was not de-registered; in fact, he was still enrolled with Santos by the date of termination of the contract.

93. For the sake of completeness, the DRC noted that the player’s passport, a copy of which had been made available to the Chamber by the CBF, confirms such assessment. The Chamber therefore concluded that at no time the player was de-registered by Santos.

5. Conclusion

94. The Chamber recalled that, only one week after the pertinent invoices had been issued, and 11 days after the default notice had been sent, the player terminated the contract. At the same time, the Chamber recalled that the amount outstanding to the player at the time of the termination did not amount to more than two monthly salaries.

95. 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, may a contract be terminated prematurely. Hence, if there are more lenient measures which can be taken in order to ensure the fulfilment of the parties’ 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.

96. Based on the foregoing considerations, given the specific constellation of the dispute at hand, and in line with the established jurisprudence of the Dispute Resolution Chamber, the DRC decided that the player did not have just cause to terminate the contract. That said, the DRC further established that the player is to be held liable for the early termination of the contract without just cause, thereby focussing its attention on the consequences of such breach of contract.

ii. Consequences

97. The DRC, first of all, established that the player is entitled to his outstanding remuneration until 27 January 2020 in line with the contract, Image Rights agreement, and side letter. This is due to the fact that the player was employed by Santos for 27 days in the month of January 2020, i.e. up until the contract was terminated. Therefore, the Chamber decided that the player is entitled to his pro-rata remuneration of January 2020.

98. Since the player’s monthly remuneration was BRL 505,000, the Chamber came to the conclusion that the player is entitled to BRL 439,839 as his pro-rata salary of January 2020.

99. Additionally, since Santos owed the player BRL 455,000 by the date of termination, and paid BRL 200,000 to the player on 31 January 2020, it follows that the player is moreover entitled to outstanding remuneration of BRL 255,000.

100. As such, the Chamber decided to partially accept the player’s counterclaim and that Santos must pay, in accordance with the general legal principle of pacta sund servanda, the amount of USD 694,839 (i.e. BRL 439,839 plus BRL 255,000) as outstanding remuneration in the case at hand.

101. In continuation, the Chamber turned its attention to art. 17 par. 1 of the Regulations, according to which the player is liable to pay compensation to Santos. Furthermore, pursuant to the unambiguous contents of art. 17 par. 2 of the Regulations, the Chamber established that the player’s new club, i.e. Pachuca, shall be jointly and severally liable for the payment of compensation. In this respect, the Chamber was eager to point out that the joint liability of the player’s new club is independent from the question as to whether the new club has committed an inducement to contractual breach or any other kind of involvement by the new club. This conclusion is in line with the jurisprudence of the DRC, which has been repeatedly confirmed by the Court of Arbitration for Sport (CAS). Notwithstanding, the Chamber recalled that in accordance with art. 17 par. 2 of the Regulations, it should be assumed that, unless otherwise proven, any club that signs a contract with a professional player who has terminated his/her contract without just cause has induced the player to terminate such contract.

102. The members of the Chamber recapitulated that, in accordance with art. 17 par. 1 of the Regulations, 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 player under the existing contract and/or the new contract, the time remaining on the existing contract up to a maximum of five years as well as the fees and expenses paid or incurred by the former club (amortised over the term of the contract) and whether the contractual breach falls within a protected period.

103. In application of the relevant provision, the Chamber held that it had to clarify as to whether the pertinent employment contract contains a provision by which the parties had beforehand agreed upon an amount of compensation payable by either contractual party in the event of breach of contract.

104. Upon careful examination of said contract, the members of the Chamber noted that two clauses were agreed by the parties pertaining to the termination of the contract, i.e. clauses 4.1 and 19, both of which established the amount of EUR 100,000,000 as payable compensation.

105. The DRC in this respect was mindful of the allegations by Santos that such amount is established within the threshold of Brazilian law; however, the Chamber emphasized that Santos had not provided evidence in this respect, failing to meet its burden of proof.

106. With the aforementioned considerations in mind, the members of the Chamber wished to recall that when deciding a dispute before the DRC, FIFA’s regulations prevail over any national law chosen by the parties. In this regard, the Chamber emphasised that the main objective of the FIFA regulations is to create a standard set of rules to which all the actors within the football community are subject to and can rely on. This objective would not be achievable if the DRC would have to apply the national law of a specific party on every dispute brought to it. This should apply, in particular, also to the termination of a contract. In this respect, the DRC wished to point out that it is in the interest of football that the termination of a contract is based on uniform criteria rather than on provisions of national law that may vary considerable from country to country. Therefore, the Chamber deemed that it is not appropriate to apply the principles of a particular national law to the termination of the contract but rather the Regulations, general principles of law and, where existing, the Chamber’s well-established jurisprudence.

107. Accordingly, the Chamber found that the compensation amount established under the contract is grossly disproportionate and unreasonable, as it is equivalent to BRL 419,454,000, that is, 69 times the yearly remuneration agreed between Santos and the player. Consequently, and in line with the established jurisprudence of the Chamber, the DRC decided that such clauses cannot be upheld and that the compensation payable to Santos shall be calculated on the basis of art. 17 of the Regulations.

108. In the calculation of the amount of compensation due by the player, the Chamber firstly turned its attention to the remuneration and other benefits due to the player under the existing contract and/or any new contract(s), a criterion which was considered by the Chamber to be essential. The members of the Chamber deemed it important to emphasise that the wording of art. 17 par. 1 of the Regulations allows the Chamber to take into account both the existing contract and any new contract(s) in the calculation of the amount of compensation.

109. According to the documentation provided by the parties, it appears that in accordance with the contract, the Image Rights Agreement, and the side letter, which would to run until 31 December 2022, the player was to receive a total remuneration of BRL 17,740,161. This amount includes the remainder of the player’s salaries of January 2020 (i.e. from 28 January 2020 onwards) and his remuneration from February 2020 until December 2022.

110. On the other hand, the value of the new employment agreement, concluded between the player and Pachuca, entitled the former to receive USD 100,000 per month. For the sake of completeness, the Chamber wished to clarify that in order to properly calculate the aforementioned average, in accordance with the jurisprudence of the DRC, it was necessary to consider the amounts due to the player under the new employment agreement with Pachuca for the same period of time remaining in the contract, i.e. until 31 December 2022. In other words, the DRC clarified that in order to properly calculate the average of the amounts due to the player under both the former and the new contract, it had to (fictionally) extend the period of the agreement between the player and Pachuca to match the original term of the contract.

111. Consequently, the value of the new employment agreement, concluded between the player and Pachuca, appears to amount to USD 3,500,000, which corresponds to approximately BRL 14,837,900 as converted on 31 January 2020, i.e. the date the player and Pachuca signed their contract.

112. In view of all of the above, the Chamber concluded that bearing in mind art. 17 par. 1 of the Regulations, after having duly taken into account the specificities of the present case, the compensation considering the player’s both existing contract and any new contract(s) amounts to BRL 16,289,031, which is the average between the amounts the player is entitled to both under the contract and new employment agreement, a sum the Chamber found to be fair and proportionate.

113. The members of the Chamber then turned to the essential criterion relating to the fees and expenses paid by Santos for the acquisition of the player’s services insofar as these have not yet been amortised over the term of the relevant contract. The Chamber recalled that a transfer compensation of USD 7,000,000 was agreed between Santos and Krasnodar for the player’s transfer, documentation of which has been presented by Santos and was confirmed by the information available to the Chamber in TMS.

114. The majority of the members of the Chamber deemed that the unamortized transfer fee could fit into the description of article 17 par. 1 referring to the fees and expenses paid or incurred by the former club (amortised over the term of the contract), and therefore could be considered as part of the compensation to be granted. Hence, according to article 17 par.1 of the Regulations and the decision of the majority of the members of the Chamber, the amount of USD 7,000,000 shall be amortised over the term of the relevant employment contract.

115. At the moment of termination, the player was still bound to Santos by 1,069 days of contract, which was originally valid for a total period of 1,424 days (i.e. 7 February 2019 until 31 December 2022). As a result of the player’s breach of contract in January 2020, Santos has thus been prevented from amortising the amount of USD 5,254,915, relating to the transfer compensation agreed in order to acquire the player’s services, which, at that time, Santos counted to be able to make use of approximately four years. Such amount corresponds to approximately BRL 23,904,600 as converted on 27 January 2020, the date of termination.

116. The DRC emphasized in this respect that Santos failed to provide evidence of the grossed-up amounts and/or payment of solidarity as it had argued, and accordingly rejected such petition. Equally, the DRC firmly noted that Santos has not provided evidence related to the costs supposedly incurred in connection with hiring a replacement player. That claim of Santos was thus also fully rejected by the DRC.

117. Finally, the amounts sought by Santos as “lost transfer fees” can only be considered as speculative, and the DRC as a consequence decided to also reject this request in line with the jurisprudence of the Chamber.

118. In sum, the Chamber, by a majority decision, concluded that the amount of compensation for breach of contract without just cause to be paid by the player to Santos consists of the amount of BRL 23,904,600 related to non-amortised expenses incurred by Santos when engaging the services of the player and BRL 16,289,031 being the reflection of the remuneration and other benefits due to the player under the previous and the new contract.

119. On account of all of the above-mentioned considerations and the specificities of the case at hand, the Chamber decided that the player must pay the amount of BRL 40,193,631 (i.e. BRL 23,904,600 plus BRL 16,289,031) to Santos as compensation for breach of contract. Furthermore, Pachuca is jointly and severally liable for the payment of the relevant compensation.

120. In addition, taking into account Santos’s request as well as the constant practice of the Dispute Resolution Chamber in this regard, the Chamber decided that the player and Pachuca must pay to Santos interest of 5% p.a. on the amount of compensation as of the date of claim, i.e. 8 June 2020, until the date of effective payment.

iii. Sporting sanctions

121. As to the matter of sporting sanctions, as established under art. 17 par. 3 and 17 par. 4 of the Regulations, the Chamber found that, albeit the fact that the termination of the contract was made without just cause, Santos was undisputedly not up to date with its contractual obligations, that is, it was in default of payments to the player.

122. In view of such particular situation, the members of the Chamber concluded that the player’s actions did not merit the imposition of sporting sanctions. In short, the DRC concluded that the defaulting position of Santos was to be considered an attenuating factor.

iv. Compliance with monetary decisions

123. Finally, the Chamber referred to par. 1 and 2 of art. 24bis of the Regulations, which stipulate that, with its decision, the pertinent FIFA deciding body shall also rule on the consequences deriving from the failure of the concerned party to pay the relevant amounts of outstanding remuneration and/or compensation in due time.

124. In this regard, the DRC pointed out that, against players, the consequence of the failure to pay the relevant amounts in due time shall consist of a ban from playing in official matches, up until the due amounts are paid and for the maximum duration of six months.

125. Additionally, the DRC highlighted 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.

126. Therefore, bearing in mind the above, the DRC decided that, in the event that the player does not pay the amounts due to Santos within 45 days as from the moment in which Santos, following the notification of the present decision, communicates the relevant bank details to the player, a ban from playing in official matches, for the maximum duration of six months shall become effective on the player in accordance with art. 24bis par. 2 and 4 of the Regulations.

127. Likewise, the DRC decided that, in the event that Pachuca does not pay the amounts due to Santos within 45 days as from the moment in which Santos, following the notification of the present decision, communicates the relevant bank details to Pachuca, 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 Pachuca in accordance with art. 24bis par. 2 and 4 of the Regulations.

128. Equally, the DRC decided that, in the event that Santos does not pay the amounts due to the player within 45 days as from the moment in which the player, following the notification of the present decision, communicates the relevant bank details to Santos, 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 Santos in accordance with art. 24bis par. 2 and 4 of the Regulations.

129. The DRC recalled that the above-mentioned bans 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.

e. Costs

130. The Chamber referred to article 18 par. 2 of the Procedural Rules, according to which “DRC proceedings relating to disputes between clubs and players in relation to the maintenance of contractual stability as well as international employment related disputes between a club and a player are free of charge”. Accordingly, the Chamber decided that no procedural costs were to be imposed on the parties.

131. Likewise and for the sake of completeness, the Chamber recalled the contents of art. 18 par. 4 of the Procedural Rules, and decided that no procedural compensation shall be awarded in these proceedings.

132. Lastly, the DRC concluded its deliberations by rejecting any other requests for relief made by any of the parties.

IV. DECISION OF THE DISPUTE RESOLUTION CHAMBER

1. The claim of the Claimant/Counter-Respondent, SANTOS FC, is partially accepted.

2. The Respondent 1/Counter-Claimant, CHRISTIAN ALBERTO CUEVA BRAVO, has to pay to the Claimant/Counter-Respondent, the following amount:

- BRL 40,193,631 as compensation for breach of contract without just cause plus 5% interest p.a. as from 8 June 2020 until the date of effective payment.

3. The Respondent 2, PACHUCA, is jointly and severally liable for the payment of the compensation mentioned under point 2 above.

4. Any further claims of the Claimant/Counter-Respondent are rejected.

5. The Claimant/Counter-Respondent is directed to immediately and directly inform the Respondent 1/Counter-Claimant and the Respondent 2 of the relevant bank account to which the due amount is to be paid.

6. The Respondent 1/Counter-Claimant and the Respondent 2 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 1/Counter-Claimant within 45 days, as from the notification by the Claimant/Counter-Respondent of the relevant bank details to the Respondent 1/Counter-Claimant, the following consequences shall arise:

 1.

The Respondent 1/Counter-Claimant shall be restricted on playing in official matches up until the due amount is paid and for the maximum duration of six months. 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 restriction period, the present matter shall be submitted, upon request, to the FIFA Disciplinary Committee.

8. In the event that the amount due, plus interest as established above is not paid by the Respondent 2 within 45 days, as from the notification by the Claimant/Counter-Respondent of the relevant bank details to the Respondent 2, the following consequences shall arise:

 1.

The Respondent 2 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.

9. The counterclaim of the Respondent 1/Counter-Claimant is admissible.

10. The counterclaim of the Respondent 1/Counter-Claimant is partially accepted.

11. The Claimant/Counter-Respondent, SANTOS FC, has to pay to the Respondent 1/Counter-Claimant the following amount:

- BRL 694,839 as outstanding remuneration.

12. Any further claims of the Respondent 1/Counter-Claimant are rejected.

13. The Respondent 1/Counter-Claimant is directed to immediately and directly inform the Claimant/Counter-Respondent of the relevant bank account to which the Claimant/Counter-Respondent must pay the due amount.

14. The Claimant/Counter-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).

15. In the event that the amount due as established above is not paid by the Claimant/Counter-Respondent within 45 days, as from the notification by the Respondent 1/Counter-Claimant of the relevant bank details to the Claimant/Counter-Respondent, the following consequences shall arise:

 1.

The Claimant/Counter-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.

16. 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).

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