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 27 August 2020

Decision of the

Dispute Resolution Chamber

passed on 27 August 2020,

regarding an employment-related dispute concerning the player Julio Cesar Rodríguez López

COMPOSITION:

Omar Ongaro (Italy), Deputy Chairman Tomislav Kasalo (Croatia), member Jérôme Perlemuter (France), member

CLAIMANT:

Julio Cesar Rodríguez López, Spain

Represented by Mr Perluigi Tiberi

RESPONDENT:

FC Voluntari, Albania

I. FACTS OF THE CASE

1. On 25 July 2019, the Spanish player, Julio César Rodriguez López, (hereinafter: the Claimant or player), and the Albanian club, FC Voluntari, (hereinafter: the Respondent or club) concluded an employment contract (hereinafter: the contract), valid as from the date of signature until 30 June 2022.

2. Art. III of the contract stipulated the following:

“1. The club undertakes to pay the player the net amount of 1.000 Euro within one day from the date of signing this contract. For the period 25.07.2019 – 30.06.2020, the club undertakes to pay the player the net amount of 72.000 Euro (for the first season) which will be paid in 12 monthly trances of 6.000 Euro net / month that will be paid on the 20th of the month next month […]”

3. On 31 January 2020, the parties concluded a termination agreement (hereinafter: the termination agreement), by means of which the club committed to pay to the player the following amounts:

- EUR 5.000 net on 31.01.2020;

- EUR 5.800 net before February 20th 2020;

- EUR 10.800 net before March 20th 2020;

- EUR 3.000 net before April 20th 2020.

4. In addition, the termination agreement stipulated the following:

“The club shall pay a penalty fee of 5.000 euros net for every month of delay. The payment of the amounts will be made in lei at the rate of 4.7 lei/ euro.”

5. On 1 April 2020, the legal representative of the player sent a default notice to the club, indicating the following:

“At the present date, the Player have only received the first payment of 5.000,00 € net and the Club should have paid also the second and third payment (5.800,00 € net and 10.800,00 € net), and additionally the amount of 5.000,00 € net for the delay of the second payment.

(…)

However, the Player is aware of the current health crisis and understands that Club may have financial problems to pay the last payment of 3.000,00 € net. Therefore, the Player grants the Club a new term of payment for the last payment of 3.000,00 € net. In the light of the foregoing, we hereby formally request the Club to, in the next seven (7) days from receipt of the present communication, to proceed with the payment of TWENTY ONE THOUSAND AND SIX HUNDRED EUROS (21.600 €) NET, and to send the Player a proposal with the new payment term of the last payment of 3.000,00 € net.”

6. On 17 April 2020, the legal representative of the player sent a new default notice indicating that he only received EUR 5,000.

7. On an unspecified date, the club requested the player to negotiate a new term for the payment in view of the COVID 19 pandemic.

8. On 22 April 2020, 1 May 2020 and 2 June 2020, the legal representative of the player sent default notices to the club.

9. In his default notice of 2 June 2020, the legal representative of the player specified the following:

“we hereby formally request the Club, in the next seven (7) days from receipt of the present communication, to proceed with the payment of (…) (34.600,00 €) NET:

•Senior debt: (…) (19.600,00 €) NET;

•Penalty fee: (…) (15.000,00 €) NET.”

10. Clause 6 of the termination agreement stipulates that in case any of the instalments is not paid on time, all other instalments shall automatically fall due and a penalty of 10% shall apply over the outstanding amount. Furthermore, interest of 1% per month applies over the outstanding amount until the date of payment.

11. On 7 July 2020, the Claimant lodged a claim before FIFA against the Respondent, and requested the payment of the total amount of EUR 48,000, detailed as follows:

 EUR 13,8000, as outstanding part of the termination agreement;

 EUR 35,000 “for the delay of in the payment”.

12. In relation to the penalty fee, the Claimant argued that “the Respondent paid [the second instalment] on 24th April 2020: two months delay” and that the third and fourth instalment were still outstanding for more than three and two months respectively.

13. As to the legal basis for the penalty, the Claimant considered that there are no grounds that might justify the reduction of the stipulated penalty, and referred to the jurisprudence of the Swiss Federal Tribunal, according to which “an excessive penalty shall only be reduced UNDER EXCEPTIONAL CIRCUMSTANCES, that is when the amount is unreasonable and flagrantly exceeds the amount admissible with regards to the sense of justice and equity”.

14. Within this context, the player underlined that art. 163 par. 1 of the Swiss Code of Obligation establishes that “the parties are free to determine the amount of the contractual penalty.”

15. In reply to the claim, the Respondent explained that, in view of the COVID-19 situation, all football players at the level of League 1 in Romania had their contracts suspended and were technically unemployed until 1 June 2020, whereas the Romanian state granted unemployment benefits of EUR 500 per month.

16. In this context, the Respondent explained that it paid the player total the amount of EUR 10,800, while it acknowledged that there is a remaining debt of EUR 13,800.

17. Moreover, the club stated that it will try to settle its debt before 15 August 2020.

18. On 21 August 2020, the Claimant informed the DRC of the following:

“We refer to the aforementioned matter and wish to inform the Dispute Resolution Chamber (DRC) that the Club (FC Voluntari) paid to the Player the amount of FOURTEEN THOUSANDS FIVE HUNDREDS AND SIXTY THREE EUROS WITH FOURTY ONE CENTS (14.563,41 €) on 18 August, 2020. The total amount still pending is THIRTY FOUR THOUSAND TWO HUNDREDS AND THIRTY SIX EUROS WITH FIFTY NINE CENTS (34.236,59 €).”

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 matter at stake. In this respect, the DRC took note that the present matter was submitted to FIFA on 7 July 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 referred to art. 3 par. 1 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 (hereinafter: the Regulations), the DRC is competent to deal with the matter at stake, which concerns an employment–related dispute with an international dimension between a player and a club, and the competence is not disputed by the parties.

3. In continuation, the DRC analysed which regulations should be applicable as to the substance of the matter. In this respect, the DRC 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 7 July 2020, the June 2020 edition of the aforementioned regulations is applicable to the matter at hand as to the substance.

4. The competence of the DRC and the applicable regulations having been established, the DRC entered into the substance of the matter. In this respect, the DRC started by acknowledging all the above-mentioned facts as well as the arguments and the documentation submitted by the parties. However, 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.

5. Having said this, the Chamber proceeded with an analysis of the circumstances surrounding the present matter, the parties’ arguments as well the documentation on file and acknowledged that, on 25 July 2019, the player and the club had concluded an employment contract, which was mutually terminated on 31 January 2020 by a termination agreement.

6. Furthermore, the Chamber acknowledged that according to said termination agreement the club undertook to pay the player the amount of EUR 23,000 in 4 instalments, as follows:

- EUR 5.000 net on 31.01.2020;

- EUR 5.800 net before February 20th 2020;

- EUR 10.800 net before March 20th 2020;

- EUR 3.000 net before April 20th 2020.

7. Moreover, the DRC noted that the parties agreed upon a penalty fee of EUR 5,000 net “for every month of delay” (cf. point I.4. above).

8. The Claimant lodged a claim against the Respondent in front of FIFA, maintaining that the Respondent has overdue payables towards him in the total amount of EUR 48,000, corresponding to EUR 13,800 as outstanding remuneration of the termination agreement plus the penalty contained in termination agreement amounting to EUR 35,000.

9. The DRC noted that the Respondent, for its part, explained that, in view of the COVID-19 situation, all football players at the level of League 1 in Romania had their contracts suspended and were technically unemployed until 1 June 2020, whereas the Romanian state granted unemployment benefits of EUR 500 per month. Moreover, it added that it paid the player the amount of EUR 10,800, while it acknowledged that there is a remaining debt of EUR 13,800.

10. Furthermore, the Chamber acknowledged the communication sent by the Claimant on 21 August 2020, according to which the latter informed the DRC about the payment made on 18 August 2020 by the club to the player amounting to EUR 14,563.41 and that he was still requesting outstanding amount totalling to EUR 34,236.59.

11. In this context, the DRC noted that the Claimant insisted on his claim for the penalty, i.e. EUR 5,000 per month of delay.

12. With regard to the penalty in the amount of EUR 34,236.59 as claimed, the DRC first analysed the penalty clause of the termination agreement as recalled in par. I.4. above. In the DRC’s view, such provision in fact consists of a hidden interest clause. A penalty clause amounting to EUR 5,000 for every month for late payment in relation to an outstanding amount of EUR 13,800 is, in the DRC’s opinion, manifestly disproportionate and exorbitant (corresponding approx. to an interest rate of 243% p.a.), and as such, cannot be enforced.

13. In view of the above, the DRC, referring to its longstanding practice, held that the “interest rate” which is in fact provided in the penalty clause of the termination agreement, should be reduced to an 18% interest per annum, which corresponds to the maximum interest in accordance with Swiss law.

14. Moreover, the DRC recalled that the principal amount of EUR 13,800 has been paid by the club to the player and that the only remaining amount due and claimed by the Claimant is interest. In this regard, the player acknowledged a payment in the amount of EUR 14,563.41, which means that, after deduction of the principal amount due, i.e. EUR 13,800, a surplus of EUR 763.41 remains has been paid.

15. Having said this, the DRC turned its attention to the calculation of the 18% interest p.a. over the 2nd, 3rd and 4th instalments (cf. point I.3. above) payable by the club to the player, and proceeded as follows:

- On the amount of EUR 5,800 as from 20 February 2020 until 24 April 2020, amounting to EUR 183.05;

- On the amount of EUR 10,800 as from 20 March 2020 until 18 August 2020, amounting to EUR 804.23;

- On the amount of EUR 3,000 as from 20 April 2020 until 18 August 2020, amounting to EUR 178.53.

Totalling EUR 1,165.81. Taking into account the surplus payment of EUR 763.41, an amount of EUR 402.40 remains outstanding as interest for late payment.

16. Therefore, as a conclusion, the DRC underlined that in accordance with the basic legal principle of pacta sunt servanda, which in essence means that agreements must be respected by the parties in good faith, the Claimant is entitled to receive from the Respondent the amount of EUR 402.40 relating to the outstanding remuneration pursuant to the termination agreement concluded by the parties on 31 January 2021.

17. In light of all the above considerations, the DRC decided that the Claimant’s claim is partially accepted and established that any further claims lodged by the Claimant are rejected.

18. Furthermore, taking into account the consideration under number II./3. above, 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 amount of outstanding remuneration and/or compensation in due time.

19. In this regard, the Chamber pointed out that, against clubs, the consequence of the failure to pay the relevant amount in due time shall consist of a ban 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.

20. Therefore, bearing in mind the above, the DRC decided that, in the event that the Respondent does not pay the amount 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.

21. Finally, the 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, Julio Cesar Rodríguez López, is partially accepted.

2. The Respondent, FC Voluntari, has to pay to the Claimant, the amount of EUR 402.40 corresponding to outstanding interest for late payments.

3. Any further claims of the Claimant are rejected.

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

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

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

 1.

The Respondent shall be banned from registering any new players, either nationally or internationally, up until the due amount is paid and for the maximum duration of three entire and consecutive registration periods. The aforementioned ban mentioned will be lifted immediately and prior to its complete serving, once the due amount is paid.

(cf. art. 24bis of the Regulations on the Status and Transfer of Players). 2.

In the event that the payable amount as per in this decision is still not paid by the end of the ban of three entire and consecutive registration periods, the present matter shall be submitted, upon request, to the FIFA Disciplinary Committee.

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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