DRC Overdue Payables
Texto da decisão
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Decision of the
Dispute Resolution Chamber
passed on 8 August 2024
regarding a contractual dispute concerning the player A
COMPOSITION:
Clifford J. HENDEL (France & USA), Deputy Chairperson
Roy VERMEER (The Netherlands), Member
Calum BEATTIE (Scotland), Member
CLAIMANT:
Player A, Country A
Represented by
RESPONDENT:
Club A, Country B
Represented by
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I. Facts of the case
1.
The Country A player A, (hereinafter: the Claimant or the Player), and the Country B club A
(hereinafter: the Respondent or the Club) signed an employment contract (hereinafter: the
Contract) valid as from the 2021-2022 season until 31 May 2024.
2.
On 30 December 2023, the parties mutually agreed to the premature termination of the
Contract and signed a termination agreement (hereinafter: the Termination Agreement).
3.
According to article 3 of the Termination Agreement, the Respondent undertook to pay the
Claimant as follows:
“On the signing date of this Mutual Termination Agreement, Club owe NET 329.000 Euro to the
Player as contractual receivables. Club agrees and accepts to pay a total amount of NET 504.000
Euro (five hundred four thousand euros) (329.000 Euro for contractual receivables + 175.000
Euro as an early termination compensation) to the Player as termination compensation and
remaining contractual receivables as follows;
-
NET € 169.000 (One hundred sixty-nine thousand euros) ultimately on 30 January 2024.
NET € 150.000 (One hundred fifty thousand euros) ultimately on 30 March 2024.
NET € 185.000 (One hundred eighty-five thousand euros) ultimately on 30 May 2024.
In case of any late payment of any instalment set above, after a grace period of 15 business
days, the Club shall be liable to pay NET 15.000 Euro (fifteen thousand euros) penalty for each
instalment. To be clear maximum amount of the penalty shall be NET 45.000 (if Club fails to pay
all three instalments within the stipulated time period).
For the avoidance of doubt, “NET” means: any sums stated as payable to the Player under this
Mutual Termination Agreement are stated net of any income taxes and/or wage taxes and/or
national insurance premiums and/or withholding taxes and/or equivalent payment obligations
assessed by the relevant tax authorities, and net of deduction of any other compensation
payable under applicable laws and/or football regulations.”
4.
By correspondence dated 8 February 2024, the Claimant put the Respondent in default and
requested payment of the first instalment of the Termination Agreement.
5.
On 20 April 2024, the Claimant sent a second default notice to the Respondent and
requested payment of EUR 349,000, on or before 3 May 2024, corresponding to the first
two instalments of the Termination Agreement, plus the contractually agreed penalties of
EUR 15,000 per instalment.
6.
On 3 May 2024, the Claimant sent a third default notice to the Respondent, reiterating its
previous correspondence and granting an additional 10 days to remedy the default.
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II. Proceedings before FIFA
7.
On 7 June 2024, the Claimant filed the claim at hand before FIFA. A brief summary of the
position of the parties is detailed in continuation.
a. Position of the Claimant
8.
According to the Claimant, the Respondent delayed due payments for more than 30 days
without a prima facie contractual basis for an amount equal to EUR 349,000 net,
representing the first two instalments of the Transfer Agreement, as well as their
corresponding penalties.
9.
The requests for relief of the Claimant, were the following:
“1.To order the Respondent to pay in favour of the Claimant the amount of NET € 349,000 (three
hundred and forty-nine thousand euros) plus 5% default interest (per annum) starting from the
first day after the respective due dates until the date of effective payment, or any other amount
that the FIFA Dispute Resolution Chamber deems justified;
2. To impose on the Respondent a fine that the DRC deems justified;
3. To impose on the Respondent any sanctions that the FIFA Dispute Resolution Chamber deems
justified.“
b. Position of the Respondent
10. According to the Respondent, it signed the Termination Agreement under the adverse
conditions of the devaluation of the Currency of Country B against the Euro and the
Claimant took advantage of the Club’s economic hardship by negotiating a high contractual
penalty.
11. In addition, the Respondent argued that if the contractual penalty is considered valid, it
should be reduced for the first two instalments to 5%, as it is excessive and exorbitant for
the Club to be penalized with the amount of EUR 30,000.
12. Lastly, the Respondent argued that most of its revenues are in Currency of Country B and
that it therefore faces significant financial difficulties, especially due to the earthquake that
affected the city A and the fluctuations in the Country B economy.
13. Considering the foregoing, the requests for relief of the Respondent were the following:
1-
“To REJECT all the claims of Claimant, if the Football Tribunal decides to accept
the case be decided only for the first and second installments of Mutual
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2-
34-
Termination Agreement which are the two receivables that are due EUR
319.000 NET.
We request that it be decided that there is no place for the EUR 30.000 NET
penalty which is exorbitant and equal the total amount of first and second
instalment’s 10%, if the Football Tribunal decides to a penalty amount, we
request a reduction.
The Respondent Club request the reject the demand for impose a fine and
other demands by the Claimant.
To order to pay Claimant to pay legal expenses, judicial cost and attorney fee
to the Respondent.”
III. Considerations of the Dispute Resolution Chamber
a. Competence and applicable legal framework
14. First of all, the Dispute Resolution Chamber (hereinafter also referred to as Chamber)
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 7 June 2024 and submitted for
decision on 8 August 2024. Taking into account the wording of art. 34 of the March 2023
edition of the Procedural Rules Governing the Football Tribunal (hereinafter: the Procedural
Rules), the aforementioned edition of the Procedural Rules is applicable to the matter at
hand.
15. Subsequently, the Chamber referred to art. 2 par. 1 and art. 24 par. 1 lit. a) of the Procedural
Rules and observed that in accordance with art. 23 par. 1 in combination with art. 22 par. 1
lit. b) of the Regulations on the Status and Transfer of Players (February 2024 edition in force
on the date of decision), it is competent to deal with the matter at stake, which concerns an
employment-related dispute with an international dimension between an a Country A
player and a Country B club.
16. Subsequently, the Single 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 Players (February 2024 edition in
force on the date of decision) and considering that the present claim was lodged on 7 June
2024, the February 2024 of said regulations (hereinafter: the Regulations) is applicable to the
matter at hand as to the substance.
b. Burden of proof
17. The Chamber recalled the basic principle of burden of proof, as stipulated in art. 13
par. 5 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 Chamber stressed
the wording of art. 13 par. 4 of the Procedural Rules, pursuant to which it may consider
evidence not filed by the parties, including without limitation the evidence generated by or
within the Transfer Matching System (TMS).
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c. Merits of the dispute
18. Its competence and the applicable regulations having been established, the Chamber
entered into the merits of the dispute. In this respect, the Chamber started by
acknowledging all the above-mentioned facts as well as the arguments and the
documentation on file. However, the Chamber 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
19. The foregoing having been established, the Chamber moved to the substance of the matter,
and took note of the fact that the Respondent acknowledged its debt towards the Claimant
amounting to the first two instalments of the Termination Agreement. However, the
Respondent challenged the validity of the contractual penalty.
20. In this context, the Chamber acknowledged that its task was to determine, based on the
evidence presented by the parties, the validity of the contractual penalty and whether the
Respondent had a valid justification for not having complied with its financial obligations.
21. The Chamber first recalled the wording of the contractual penalty, which stipulates as
follows:
“In case of any late payment of any instalment set above, after a grace period of 15 business
days, the Club shall be liable to pay NET 15.000 Euro (fifteen thousand euros) penalty for each
instalment. To be clear maximum amount of the penalty shall be NET 45.000 (if Club fails to pay
all three instalments within the stipulated time period).“.
22. After having reviewed the said provision in the Termination Agreement, the Chamber
mentioned 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 Chamber
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.
23. In the specific case and upon review of the relevant contractual penalty, the Chamber held
that the provision appeared fair and proportionate. In fact, the parties agreed in the
Termination Agreement on a contractual penalty of a maximum of EUR 45,000 net in the
event of the Club failing to pay the three instalments within the stipulated time,
corresponding to EUR 504,000 net. In accordance with its jurisprudence, the Chamber
deemed that the contractual penalty is proportionate and reasonable in light of the value
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of the Termination Agreement, as it represents approximately 9% of the outstanding
amount.
24. In continuation, the Chamber found that the arguments raised by the Club cannot be
considered a valid reason for non-payment of the monies claimed by the Player. In other
words, the evidence provided by the Club does not represent a reasonable justification for
not having complied with the terms of the Transfer Agreement. Therefore, the Club is not
exempted from its obligation to fulfil its contractual obligations towards the Player.
25. In view of the foregoing and bearing in mind the basic legal principle of pact sunt servanda,
which in essence means that agreements must be respected by the parties in good faith,
the Respondent is held liable for the consequences thereof.
ii. Consequences
26. Having stated the above, the Chamber turned its attention to the question of the
consequences of such unjustified breach of the Termination Agreement committed by the
Respondent.
27. The Chamber observed that the financial obligations deemed as outstanding in the present
case correspond to the first two instalments under the Transfer Agreement, amounting to
EUR 319,000 net, as well as the contractual penalty of EUR 15,000 net per instalment.
28. As a consequence, and in accordance with the general legal principle of pacta sunt servanda,
the Chamber decided that the Respondent is liable to pay to the Claimant the amounts
claimed as outstanding under the Transfer Agreement, in total EUR 349,000 net, as detailed
above.
29. Lastly, taking into consideration the Claimant’s request as well as the constant practice of
the Chamber in this regard, the latter decided to award the Claimant interest at the rate of
5% p.a. on the outstanding amounts as from the respective due dates until the date of
effective payment, and no interest on the contractual penalty, in accordance with the
general legal principle of ne bis in idem.
iii. Application of art. 12bis of the Regulations
30. In continuation, the Chamber referred to art. 12bis par. 2 of the Regulations, which
stipulates that any club found to have delayed a due payment for more than 30 days without
prima facie contractual basis may be sanctioned in accordance with art. 12bis par. 4 of the
Regulations.
31. To this end, the Chamber confirmed that the Player put the Club in default of payment of
the amounts sought, which had fallen, due for more than 30 days before, and granted the
Club a 10-day deadline to cure such breach of the Termination Agreement.
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32. Accordingly, the Chamber confirmed that the Club had delayed a due payment without a
prima facie contractual basis. It followed that the criteria enshrined in art. 12bis of the
Regulations was met in the case at hand.
33. The Chamber further established that by virtue of art. 12bis par. 4 of the Regulations it has
competence to impose sanctions on the Club. On account of the above and bearing in
mind that this is the sixth offense by the Club within the last two years, the Chamber decided
to impose a fine of EUR 50,000 on the Club in accordance with art. 12bis par. 4 lit.
c) of the Regulations.
34. In this sense, the Chamber wished to highlight that a repeated offence will be considered as
an aggravating circumstance and lead to more severe penalty in accordance with art. 12bis
par. 6 of the Regulations.
iv. Compliance with monetary decisions
35. Finally, taking into account the applicable Regulations, the Chamber referred to art. 24bis
par. 1 and 2 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.
36. In this regard, the Chamber 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. The overall
maximum duration of the registration ban shall be of up to three entire and consecutive
registration periods.
37. Therefore, bearing in mind the above, the Chamber decided that the Club must pay the full
amount due (including all applicable interest) to the Player within 45 days of notification of
the decision, failing which, at the request of the creditor, a ban from registering any new
players, either nationally or internationally, for the maximum duration of three entire and
consecutive registration periods shall become immediately effective on the Club in
accordance with art. 24bis par. 2, 4, and 7 of the Regulations.
38. The Club shall make full payment (including all applicable interest) to the bank account
provided by the Player in the Bank Account Registration Form, which is attached to the
present decision.
39. 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.
8 of the Regulations.
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d. Costs
40. The Chamber referred to art. 25 par. 1 of the Procedural Rules, according to which
“Procedures are free of charge where at least one of the parties is a player, coach, football agent,
or match agent”. Accordingly, the Chamber decided that no procedural costs were to be
imposed on the parties.
41. Furthermore, the Chamber recalled the contents of art. 25 par. 8 of the Procedural Rules
and decided that no procedural compensation shall be awarded in these proceedings.
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IV. Decision of the Dispute Resolution Chamber
1.
The claim of the Claimant, player A, is accepted.
2.
The Respondent, Club A, must pay to the Claimant the following amounts:
-
€ 169,000 net as outstanding payment plus 5% interest per annum as from 31
January 2024 until the date of effective payment;
-
€ 150,000 net as outstanding payment plus 5% interest per annum as from 31 March
2024 until the date of effective payment;
-
€ 30,000 net as contractual penalty.
3.
Full payment (including all applicable interest) shall be made to the bank account indicated
in the enclosed Bank Account Registration Form.
4.
Pursuant to art. 24 of the Regulations on the Status and Transfer of Players, if full payment
(including all applicable interest) is not made within 45 days of notification of this decision,
the following consequences shall apply:
1. The Respondent shall be banned from registering any new players, either nationally or
internationally, up until the due amount is paid. The maximum duration of the ban shall
be of up to three entire and consecutive registration periods.
2. The present matter shall be submitted, upon request, to the FIFA Disciplinary Committee
in the event that full payment (including all applicable interest) is still not made by the
end of the three entire and consecutive registration periods.
5.
The consequences shall only be enforced at the request of the Claimant in accordance
with art. 24 par. 7 and 8 and art. 25 of the Regulations on the Status and Transfer of Players.
6.
This decision is rendered without costs.
7.
A fine in the amount of USD 50,000 is imposed on the Respondent, which must be paid
to FIFA within 30 days of notification of this decision. Such fine must be paid to the
following bank account with a clear reference to the case FPSD-XXXXX:
UBS Zurich
Account number 230-366677.61N (FIFA Players’ Status)
Clearing number 230
IBAN: CH12 0023 0230 3666 7761 N
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SWIFT: UBSWCHZH80A
For the Football Tribunal:
Emilio García Silvero
Chief Legal & Compliance Officer
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NOTE RELATED TO THE APPEAL PROCEDURE:
According to article 57 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 17 of the Procedural Rules).
CONTACT INFORMATION:
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FIFA-Strasse 20 P.O. Box 8044 Zurich Switzerland
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