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 25 February 2021

Decision of the

DRC Judge

passed on 25 February 2021,

regarding an employment-related dispute concerning the player Diego Zivulic

BY:

Philippe Diallo (France), DRC Judge

CLAIMANT:

Diego Zivulic, Croatia

Represented by Mr. Menno Teunissen

RESPONDENT:

Pafos FC, Cyprus

Represented by Mr. Christoforos Florou

I. FACTS OF THE CASE

1. On 27 February 2020, the DRC decided an employment related dispute between the Croatian player, Diego Zivulic (hereinafter: Claimant or player) and the Cypriot club, Pafos FC (hereinafter: Respondent or club) and awarded the player the amount of EUR 232,588.80 plus interest as outstanding remuneration as well as compensation for breach of contract (Ref. no. 19-01242).

2. On 10 June 2020, the parties concluded a settlement agreement, according to which the Respondent undertook to pay the Claimant EUR 200,000, as follows:

- EUR 75,000 on 12 June 2020;

- EUR 45,000 on 12 July 2020;

- EUR 40,000 on 12 August 2020;

- EUR 40,000 on 12 September 2020.

3. Furthermore, the settlement agreement stated:

“3.1 Upon duly execution of the terms of the present settlement agreement, each Party agrees, on behalf of itself and on behalf of its Related Parties not to sue, commence, voluntarily aid in any way, prosecute or cause to be commenced or prosecuted against the other party or its related parties any action, claim, complaint, suit or other proceeding concerning the Released claims, in this jurisdiction or any other and before any court of judicial authority whatsoever, including, but not limited to, FUFA, any judicial body or FIFA and/or CAS.

3.2 Article 2 and 3.1 shall not apply to, and the Released claims shall not include, any claims in case of any breach of this agreement, namely in case the Club delays or fails to pay to the Player in accordance with the strict payment schedule in Article 1.1 or fails to provide the requested tax certificates as set out in article 1.3.

In such case, upon condition and prior written notice to be sent by email:

- The player has the right to bring his case before FIFA Dispute Resolution Chamber claiming the full amounts due under the FIFA DRC Decision (ref:19-01242), with the deduction of any amounts already paid under this Agreement. These amounts shall be immediately due and payable by the Club to the Player by International Bank Transfer to the Player’s nominated account;

- The Club shall pay 25.000 EUR (twenty-five-thousand Euros) net of all taxes as penalty payment and compensation for the default (the “Penalty amount”) by international bank Transfer to the Player’s nominated bank account in addition to the balance of the amounts due”.

4. On 1 October 2020, the Claimant put the Respondent in default and requested payment of EUR 40,000, corresponding to the last instalment of the settlement agreement, due on 20 September 2020, within 5 days.

5. On 9 October 2020, the Claimant put the Respondent in default again and requested payment of EUR 40,000, corresponding to the last instalment of the settlement agreement, due on 20 September 2020, within 5 days.

6. On 26 October 2020, the Claimant lodged a claim against the Respondent in front of FIFA, requesting payment of EUR 65,000, plus 5% interest p.a., as follows:

- EUR 40,000 corresponding to the last instalment of the settlement agreement;

- EUR 25,000 corresponding to the contractually agreed penalty payment (cf. pt. 3 above).

7. In his claim, the Claimant maintained that the last instalment of the settlement agreement remained outstanding.

8. Furthermore, he argued that the penalty fee agreed upon the settlement agreement is applicable and not excessive, as the penalty amount corresponds to 12.5% of the total settlement amount.

9. In its reply to the claim, the Respondent acknowledged having failed to pay the last instalment of the settlement agreement on time.

10. However, the Respondent alleged having remitted the amount of EUR 10,000 on 2 November 2020. Therefore, it argued that the amount of EUR 30,000 remained outstanding.

11. In respect of the penalty clause, the Respondent held that it shall not be applicable as it is excessive. According to the Respondent the penalty amount of EUR 25,000 represents 83.3% of the outstanding amount and shall therefore not be taken into account.

12. The player did not contest having received the amount of EUR 10,000.

II. CONSIDERATIONS OF THE DRC JUDGE

1. First of all, the Dispute Resolution Chamber judge (hereinafter also referred to as DRC judge) analysed whether he was competent to deal with the case at hand. In this respect, he took note that the present matter was submitted to FIFA on 26 October 2020 and submitted for decision on 25 February 2021. Taking into account the wording of art. 21 of the January 2021 edition of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (hereinafter: the Procedural Rules), the June 2020 edition of the Procedural Rules is applicable to the matter at hand.

2. Subsequently, DRC judge referred to art. 3 par. 2 and par. 3 of the Procedural Rules and confirmed that in accordance with art. 24 par. 1 and par. 2 in conjunction with art. 22 lit. b of the Regulations on the Status and Transfer of Players (edition February 2021), he is competent to deal with the matter at stake, which concerns an employment-related dispute with an international dimension between a player and club.

3. Furthermore, the DRC judge 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 February 2021), and considering that the present claim was lodged on 26 October 2020, the October 2020 edition of said regulations (hereinafter: the Regulations) is applicable to the matter at hand as to the substance.

4. The competence of the DRC judge and the applicable regulations having been established, the DRC judge entered into the substance of the matter. In this respect, the DRC judge started by acknowledging all the above-mentioned facts as well as the arguments and the documentation submitted by the parties. However, the DRC judge emphasised that in the following considerations it will refer only to the facts, arguments and documentary evidence, which it considered pertinent for the assessment of the matter at hand. In particular, the DRC judge recalled that in accordance with art. 6 par. 3 of Annexe 3 of the Regulations, FIFA may use, within the scope of proceedings pertaining to the application of the Regulations, any documentation or evidence generated or contained in the Transfer Matching System (TMS).

5. Having said this, the DRC judge proceeded with an analysis of the circumstances surrounding the present matter, the parties’ arguments as well the documentation on file, bearing in mind art. 12 par. 3 of the Procedural Rules, in accordance with which any party claiming a right on the basis of an alleged fact shall carry the burden of proof.

6. First of all, the DRC judge acknowledged that on 27 February 2020, the Dispute Resolution Chamber decided an employment related dispute between the parties and awarded the player the amount of EUR 232,588.80 plus interest as outstanding remuneration as well as compensation for breach of contract (Ref. no. 19-01242).

7. Furthermore, the DRC judge noted that the parties concluded a settlement agreement, according to which the Respondent undertook to pay the Claimant the amount of 200,000 in four instalments. Said settlement agreement also contained a penalty clause.

8. The DRC judge took notice of the Claimant’s claim that EUR 40,000, corresponding to the last instalment of the settlement agreement, due on 12 September 2020, remained outstanding.

9. On the other side, the DRC judge observed that Respondent acknowledged that the last instalment of the termination agreement was not paid on time. However, the Respondent remitted a partial payment of EUR 10,000 on 2 November 2020, which remained undisputed by the Claimant.

10. Furthermore, the DRC judge duly noted that the Respondent requested to ignore the contractual penalty since it was excessive.

11. Subsequently, the DRC judge addressed the matter of the penalty the parties contractually agreed upon per clause 3 of the termination agreement.

12. After due deliberation, the DRC judge concluded that penalty clauses may be freely entered into by the contractual parties and may be considered acceptable, in the event that the pertinent written clause meets certain criteria such as proportionality and reasonableness. In this respect, the DRC judge highlighted that in order to determine as to whether a penalty clause is to be considered acceptable, the specific circumstances of the relevant case brought before it shall also be taken into consideration.

13. In the specific case at hand, the DRC judge deemed that a penalty of EUR 25,000, corresponding to 12.5% of the total amount due from the settlement agreement and to which the parties contractually agreed upon, is both proportionate and reasonable in the case at hand.

14. On account of all of the above, the DRC judge decided that the penalty is valid and applicable in the present matter.

15. Consequently, the DRC judge decided to partially accept the Claimant’s claim and to reject the argumentation put forward by the Respondent in its defence.

16. On account of the aforementioned considerations, the DRC judge established that the Respondent failed to pay the Claimant the total amount of EUR 30,000, corresponding to a part of the last instalment of the termination agreement. Furthermore, since the Respondent failed to remit such instalment, the Single Judge decided that the Respondent has to pay the Claimant the contractual penalty of EUR 25,000.

17. Consequently, the DRC judge decided that, in accordance with the general legal principle of pacta sunt servanda, the Respondent is liable to pay to the Claimant the total amount of EUR 55,000.

18. In addition, taking into consideration the Claimant’s claim, the Single Judge decided to award the Claimant interest at the rate of 5% p.a. on the amount of EUR 30,000 as of the day after the due date, i.e. 13 September 2020.

19. In accordance with the long-standing jurisprudence of the Dispute Resolution Chamber and the Players’ Status Committee, no interest is granted for the contractual penalty.

20. Moreover, the Chamber rejected any claim for legal expenses and procedural compensation in accordance with art. 18 par. 4 of the Procedural Rules and the Chamber’s respective longstanding jurisprudence in this regard.

21. Furthermore, taking into account the consideration under number II./3. above, the DRC judge 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.

22. In this regard, the DRC judge pointed out that, against clubs, the consequence of the failure to pay the relevant amounts in due time shall consist of a ban from registering any new players, either nationally or internationally, up until the due amounts are paid and for the maximum duration of three entire and consecutive registration periods.

23. Therefore, bearing in mind the above, the DRC judge 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.

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

25. The DRC judge closed its deliberations by rejecting any further claim lodged by the Claimant.

III. DECISION OF THE DRC JUDGE

1. The claim of the Claimant, Diego Zivulic, is partially accepted.

2. The Respondent, Pafos FC, has to pay to the Claimant, the following amount:

- EUR 30,000 as outstanding amount plus 5% interest p.a. as from 13 September 2020 until the date of effective payment;

- EUR 25,000 as penalty fee.

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 DRC judge:

Emilio García Silvero

Chief Legal & Compliance Officer

NOTE RELATED TO THE APPEAL PROCEDURE:

According to article 58 par. 1 of the FIFA Statutes, this decision may be appealed against before the Court of Arbitration for Sport (CAS) within 21 days of receipt of the notification of this decision.

NOTE RELATED TO THE PUBLICATION:

FIFA may publish this decision. For reasons of confidentiality, FIFA may decide, at the request of a party within five days of the notification of the motivated decision, to publish an anonymised or a redacted version (cf. article 20 of the Procedural Rules).

CONTACT INFORMATION:

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FIFA-Strasse 20 P.O. Box 8044 Zurich Switzerland

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