Labour Disputes
Texto da decisão
REF FPSD-3193
Decision of the
Dispute Resolution Chamber
passed on 29 August 2022
regarding an employment-related dispute concerning the player David
Caiado Dias
COMPOSITION:
DE WEGER, Frans (The Netherlands), Chairperson
COLUCCI, Michele (Italy), Member
PERLEMUTER, Jerome (France), Member
CLAIMANT:
David Caiado Dias, Portugal
Represented by Gonçalo Almeida
RESPONDENT:
LLC FC Metalist, Ukraine
Represented by Kellerhals Carrard and Asters Law
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INDEX
I.
INTRODUCTION................................................................................................. 5
II.
FACTS OF THE CASE ........................................................................................... 6
III.
PROCEEDINGS BEFORE FIFA ............................................................................. 9
a.
Information provided by the UAF (26 August 2021) ................................................. 10
b.
Information provided by the Bankruptcy Trustee (6 October 2021) ..................... 15
c.
The suspension of the proceedings (23 March 2022) ............................................... 16
IV.
SUBMISSIONS OF THE PARTIES ...................................................................... 16
a.
Claim of the player (29 July 2021 and 12 August 2021) ............................................ 17
b.
Reply of LLC FC Metalist (27 October 2021) ............................................................... 19
A.
Admissibility ......................................................................................................................... 20
B.
Substance ............................................................................................................................. 21
(B.1) The sporting succession ................................................................................................ 21
(B.2) The player’s lack of diligence ........................................................................................ 24
(B.3) The violation of the public order of Ukraine .............................................................. 25
C.
c.
The requests for relief ........................................................................................................ 25
Rejoinder of the player (29 November 2021) ............................................................ 26
A.
Admissibility ......................................................................................................................... 26
B.
Substance ............................................................................................................................. 26
(B.1) The sporting succession ................................................................................................ 26
(B.2) The player’s lack of diligence ........................................................................................ 28
(B.3) The violation of the public order of Ukraine .............................................................. 30
C.
The requests for relief ........................................................................................................ 30
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d.
Final comments of the club (17 December 2021) ..................................................... 31
A.
Admissibility ......................................................................................................................... 31
B.
Substance ............................................................................................................................. 32
(B.1) The sporting succession ................................................................................................ 32
(B.2) The player’s lack of diligence ........................................................................................ 33
(B.3) The Employment Contract between the player and PJSC FC Metalist .................... 34
C.
V.
The requests for relief ........................................................................................................ 34
CONSIDERATIONS OF THE DISPUTE RESOLUTION CHAMBER ...................... 35
a.
Competence and admissibility ................................................................................... 35
b.
Applicable legal framework ........................................................................................ 37
c.
Burden of proof ............................................................................................................ 37
d.
Merits of the dispute ................................................................................................... 38
A.
Main legal discussion and considerations ....................................................................... 38
(A.1) Is LLC FC Metalist the sporting successor of PJSC FC Metalist? ............................... 38
(A.2) What are the consequences that follow?.................................................................... 44
e.
Compliance with monetary decisions ....................................................................... 52
f.
Costs ............................................................................................................................... 53
VI.
DECISION OF THE DISPUTE RESOLUTION CHAMBER .................................... 54
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I.
INTRODUCTION
1.
The relevant legal or natural persons to this dispute are:
a.
the Portuguese player, Mr David Caiado Dias (hereinafter: the player or the
Claimant), a professional footballer born on 2 May 1987.
b.
the Ukrainian bankrupted club, Public Joint-Stock Company Football Club
Metalist (hereinafter: PJSC FC Metalist), previously affiliated to the Ukrainian
Football Association (UAF) and currently under liquidation proceedings before
the relevant courts in Ukraine.
c.
the Ukrainian club, LLC FC Metalist (hereinafter: LLC FC Metalist or the
Respondent), currently affiliated to the UAF and deemed by the player to be
the sporting successor of PJSC FC Metalist. The Respondent was originally
named LLC FC Metal (hereinafter: LLC FC Metal), having undertaken its current
name in October 2019. The Respondent is headquartered in the city of Kharkiv,
Ukraine.
d.
the Ukrainian clubs, Football Club Metalist 1925 (hereinafter: FC Metalist 1925)
and SC Metalist (hereinafter: SC Metalist), both headquartered in the city of
Kharkiv and affiliated to the UAF. FC Metalist 1925 and SC Metalist are however
not parties to these proceedings.
2.
In short, on 31 July 2015, the player submitted a claim before FIFA for outstanding
remuneration and compensation for breach of contract against PJSC FC Metalist. The
case was filed under ref. no. 15-01589/ebo (hereinafter: the First Claim). However, said
proceedings were subsequently closed because PJSC FC Metalist was disaffiliated from
the UAF.
3.
On 29 July 2021, the player requested FIFA to resume his previous claim, this time
against LLC FC Metalist (i.e. popularly called FC Metalist Kharkiv), allegedly the sporting
successor of PJSC FC Metalist. Following the receipt of his request, the FIFA general
secretariat informed the player that said petition would be treated as a new claim, filed
under ref. no. FPSD-3193.
4.
The admissibility of the claim is challenged by the Respondent. Additionally, the core
issue of the dispute as to the substance refers to the assessment of the sporting
succession between PJSC FC Metalist and LLC FC Metalist. In support of its position that
no sporting succession occurred, LLC FC Metalist thoroughly recalled its history and –
in doing so – referred to FC Metalist 1925 and SC Metalist as well as other Ukrainian
clubs from Kharkiv that could possibly be deemed as sporting successor(s) of PJSC FC
Metalist.
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5.
Lastly, the case at hand was suspended on behalf of the Chairperson of the Dispute
Resolution Chamber (DRC) from March 2022 until June 2022 due to the exceptional
situation deriving from the war in Ukraine.
II.
FACTS OF THE CASE
6.
On 27 February 2015, the player and PJSC FC Metalist entered into an employment
contract valid as from 21 February 2015 until 30 June 2016 (hereinafter: the
Employment Contract).
7.
Clause 5 of the Employment Contract read inter alia as follows, in verbis:
“5.1. For the fulfilment of his responsibilities provided by this Contract, the Football
Player will receive monthly salary:
- from 21 February 2015 until 30 June after the payment by the club of all necessary
taxes and duties, the club will pay to the Football Player the amount which will be
equivalent to $ 5000 (five thousand US dollars) net of any taxes at the official dollar
rate established by National Bank of Ukraine at the date of contract signing;
If on the date of payroll accounting (payment) to the Football Player the official
exchange rate of US dollars to Hryvnia, established by the National Bank of Ukraine,
will be less than the above mentioned, the payment of salary will be made in Hryvnia in
amount calculated using the official exchange rate of US Dollar Tohryvnia, established
by the National Bank of Ukraine on the date of payroll accounting.
If on the date of payroll accounting (payment) to the Football Player the official
exchange rate of US dollars to Hryvnia, established by the National Bank of Ukraine,
will be more than the above mentioned, the payment of salary will be made in Hryvnia
in amount calculated using the official exchange rate of US Dollar Tohryvnia,
established by the National Bank of Ukraine on the date of payroll accounting, but no
more than 20,00 UAH for 1 US Dollar.
5.2. Salary will be paid monthly either to an account opened in Ukrainian banking
establishment indicated by the Football Player, or from the cash desk of the company.
The Club can assist the Football Player to open the relevant bank account.
5.3. The Club deducts from the salary of the Football Player indicated in the clause 5.1
all necessary taxes, including – tax on personal income, and other taxes, social and
pension contributions, required under Ukrainian legislation, and pay them in the name
of the Football Player. On demand of the Football Player, the Club provides information
about the amounts of taxes and contributions paid on behalf of the Football Player.
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Depending on the taxation, the amount of deducted taxes as well as the amount of
salary paid in Hryvnia equivalent can vary slightly.
5.4. Depending on the personal results of the Football Player’s professional activity and
his contribution to the team results, the Club has the right to pay one-time payments,
bonuses and other remunerations to the Football Player. The parties can conclude a
separate Agreement on terms and procedure of payment of remunerations”.
8.
Additionally, the player and PJSC FC Metalist also signed an “Agreement on terms and
procedure of payment of remunerations” dated 21 February 2015 (hereinafter: the
Agreement).
9.
Clauses 1 to 5 of the Agreement read as follows, in verbis:
“1. During the terms of validity of this Agreement, that is from 21 February 2015 until
30 June 2016 the Football Player undertakes to perform obligations of professional
football player of the Club team and the Club undertakes to pay to the Football Player
additional monthly remuneration (bonus) in amount of $20,000 (twenty thousand) US
dollars net.
2. The remuneration amounts, specified in article 1 of this Agreement are paid using
the official exchange rate of US Dollar to Hryvnia established by the National Bank of
Ukraine at the date of payment, but no more than 20,00 UAH for 1 US Dollar.
3. Club undertakes to pay to the Football Player signing on fee in amount of $75000
(seventy five thousand US dollars) till 15 May 2015.
4. The Club undertakes to provide for the Football Player a comfortable apartment in
accordance with modern requirements for the period of performance of duties of the
Club football team professional football player or to compensate to the Football Player
expenses for 1 apartment rent in amount equivalent to $ 500 (five hundred US Dollars).
5. The Club undertakes to provide the Football Player and his family (wife and child)
with flight tickets Kharkiv – Porto – Kharkiv twice a year”.
10.
On 1 July 2015, the player put PJSC FC Metalist in default and requested payment of
USD 159,142 in connection with the Employment Contract and the Agreement, under
penalty of termination. The amount was broken down as follows:
- Salary of February 2015 (8 days of work), in the amount of USD 7,142;
- Salary of April 2015, in the amount of USD 25,000;
- Salary of May 2015, in the amount of USD 25,000;
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-
Salary of June 2015, in the amount of USD 25,000;
Accommodation allowance of March 2015, in the amount of USD 500;
Accommodation allowance of April 2015, in the amount of USD 500;
Accommodation allowance of May 2015, in the amount of USD 500; and
Accommodation allowance of June 2015, in the amount of USD 500.
11.
On 8 July 2015, PJSC FC Metalist replied to the abovementioned notice and disputed
the amounts claimed by the player vis-à-vis his obligation to have a Ukrainian bank
account and receive the remuneration in national currency (cf. clause 5.2 of the
Employment Contact). In addition, PJSC FC Metalist argued that the player was the one
breaching the Employment Contract because inter alia he was delayed for the club’s
training camp, “manifested unwillingness to participate in the training process”, left the
club’s premises without authorization, and failed to avail himself in the club to receive
his funds. Hence, he would be liable to pay compensation in case of termination.
12.
On 9 July 2015, the player notified the termination of the employment relationship with
PJSC FC Metalist due to overdue payables.
13.
On 31 July 2015, the player lodged the First Claim against PJSC FC Metalist. In synthesis,
he requested to be awarded USD 159,142 as outstanding remuneration and USD
300,000 as compensation for breach of contract, plus 5% interest p.a. and the
reimbursement of the expenses with flight tickets.
14.
On 5 August 2015, the player entered into a new employment agreement with the
Spanish club, SD Ponferradina, valid as from the date of signature until 30 June 2017.
Accordingly, the player would be entitled to, inter alia, a fixed remuneration of EUR
140,000 until 30 June 2016.
15.
On 8 August 2016 and after being invited to do so by the FIFA general secretariat, the
UAF informed that PJSC FC Metalist was no longer affiliated nor participating in any
competitions under its auspices.
16.
On 19 August 2016, FIFA reverted to the player in the context of the First Claim and, by
referring to the information provided by the UAF, clarified that it was not able to
proceed with the cited matter due to the disaffiliation of PJSC FC Metalist.
Consequently, the First Claim was closed.
17.
On 9 June 2017, the Kharkiv Region Commercial Court commenced a bankruptcy
procedure against PJSC FC Metalist. Contextually, the operative part of the decision
issued by the court read, inter alia, as follows (freely translated by the Respondent):
“1. To commence bankruptcy proceedings with respect to Public JSC Football Club
‘Metalist’ Kharkiv, company’s code 24341697.
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2. From the moment of initiating bankruptcy proceedings:
- submission of claims to the debtor by bankruptcy and secured creditors and their
satisfaction may take place only in the manner prescribed by this Law and within the
bankruptcy proceedings;
- filing by current creditors of claims against the debtor and their satisfaction may
take place in the case and in the manner prescribed by this Law;
- seizure of the debtor’s property or other restrictions on the debtor’s disposal of the
property belonging to it may be applied exclusively by the commercial court in the
course of bankruptcy proceedings;
[…]
4. To introduce a moratorium on satisfaction of creditors’ claims, which provides for
the suspension of the debtor’s monetary obligations and obligations to pay taxes and
fees (mandatory payments), which become due before the moratorium, and the
termination of measures to ensure fulfillment of these obligations and obligations to
pay taxes and fees (mandatory payments) applied before the date of the moratorium.
5. To publish on the official website of the Supreme Economic Court of Ukraine the
announcement of the commencement of bankruptcy proceedings of the Public JointStock Company ‘Football Club ‘Metalist’ (Debtor’s company’s code: 24341697), the text
of which is attached.”
18.
On 11 June 2017, the Supreme Economic Court of Ukraine published in its website a
notification on commencement of the bankruptcy procedure against PJSC FC Metalist.
19.
On 22 April 2021, PJSC FC Metalist was declared bankrupted, and a liquidation
procedure ensued. This procedure is still pending before the Commercial Court of
Kharkiv Region.
III.
PROCEEDINGS BEFORE FIFA
20.
On 29 July 2021, the player wrote to FIFA asking to continue with the First Claim.
According to the player, he became aware that a new football club also named FC
Metalist Kharkiv would compete in the second division of the Ukrainian football during
the season 2021/2022. As such, he argued that said new club was to be considered the
sporting successor of the original one (i.e. PJSC FC Metalist) in line with article 15, par.
4 of the FIFA Disciplinary Code and jurisprudence of the Court of Arbitration for Sport
(CAS) on the matter (CAS 2016/A/4550).
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21.
On 9 August 2021, the FIFA general secretariat referred the player to its previous
correspondence dated 19 August 2016, and informed that the proceedings regarding
the First Claim had been closed. As such, the player was invited to complete its petition
and submit a new claim, if he wished to do so.
22.
On the same day, the FIFA general secretariat requested the UAF to inform “the status
of the Ukrainian club, FC Metalist Kharkiv, and its relationship with the homonymous club
previously affiliated to [the UAF]”. Additionally, a “clarification on whether there was a legal
/ sporting succession between the aforementioned clubs” was also requested.
23.
On 12 August 2021, the player resubmitted his statement of claim alike in the First
Claim, however listing the “new FC Metalist Kharkiv” as the respondent on the grounds
that legal and/or sporting succession had taken place.
a. Information provided by the UAF (26 August 2021)
24.
On 26 August 2021, the UAF provided FIFA with the information on the status of its
affiliated clubs and the occurrence of a potential legal and/or sporting succession
between PJSC FC Metalist and LLC FC Metalist. It shall be highlighted that the UAF
identified the new club popularly called “FC Metalist Kharkiv” as being LLC FC Metalist,
but concluded that said club is neither the legal nor the sporting successor of PJSC FC
Metalist based inter alia on the following considerations:
As to the termination of PJSC FC Metalist
• “the circumstances of the termination of [PJSC FC Metalist] are unique. They differ
significantly from the circumstances described in the jurisprudence of FIFA and CAS,
when the football clubs’ parent companied went into bankruptcy, while their assets
were subject to formal ‘laundering’ through civil proceedings, being transferred to
other entities that continued the activities of such football clubs, often taking over
federative rights and the place of the old clubs in the respective competitions”;
• notwithstanding the sporting achievements, PJSC FC Metalist was sold by Mr
Oleksandr Yaroslavskyi (hereinafter: Mr Yaroslavskyi) to new investors
(including inter alia Mr Sergiy Kurchenko; hereinafter: Mr Kurchenko).
Subsequently, criminal proceedings were launched against the new owners,
cumulating in financial difficulties and the loss of the sporting license. On 22
April 2021, PJSC FC Metalist was declared “bankrupt and commenced a liquidation
procedure in the course of which the club’s assets will be evaluated and sold and the
proceeds will be used to repay the debts”;
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• “in 2018, the Cabinet of Ministers of Ukraine by its order transferred the Metalist
Stadium and other infrastructure facilities of [PJSC FC Metalist] to the Kharkiv
Regional State Administration”. In addition, “since 2017, [the] intellectual property
rights, which legally belonged to [PJSC FC Metalist] were arrested on the basis of a
court decision upon the claim of one of the creditors of [PJSC FC Metalist]. This
arrest was only lifted on the basis of a court decision in March 2021”;
• in August 2016, a new football club was established in Kharkiv: FC Metalist 1925,
who “became the main tenant of the infrastructure that one belonged to PJSC FC
Metalist. Also in August 2016, a club named SC Metalist was created but “did not
become a meaningful football club”.
As to the creation of LLC FC Metalist
•
in October 2019, LLC FC Metal was founded. “Its sole owner was Mr Yeven
Krasnikov, the former sporting director of [PJSC FC Metalist]” who “made it clear
that [LLC FC Metal] does not intend to become a base for the revival of [PJSC FC
Metalist], and that the main goal of the new club is to develop a strong youth
academy in Kharkiv”;
•
“in October 2019, [LLC FC Metal] began gathering players and creating a football
club. For the 2020/2021 season, [LLC FC Metal] passed UAF licensing procedure
receiving a license for the first time and acquiring the right to participate in the
Second League of Ukrainian Football Championship, the lowest division of
professional football competitions in Ukraine. [LLC FC Metal] was located in
Kharkiv, played at the Solnechnyyi Station (which is in no way connected with [PJSC
FC Metalist], and had blue-yellow colors – the traditional colors of Kharkiv”;
•
LLC FC Metal would normally start its activities in amateur competitions,
however due to the devastating circumstances of the COVID-19 pandemic, UAF
allowed it to participate directly in the Second League;
•
in April 2021, one of the previous owners of PJSC FC Metalist, Mr Yaroslavskyi,
decided to join the development of LLC FC Metal. Also in 2021, LLC FC Metal (i)
“has obtained an access to the Metalist stadium for hosting its matches through a
direct contract with the municipal operator of the stadium”; and (ii) was assigned
part of the intellectual property rights from the old PJSC FC Metalist, via Mr
Yaroslavskyi;
•
“in June 2021, UAF allowed [LLC FC Metal] to change its name to FC Metalist Kharkiv.
On 17 June 2021, [LLC FC Metal] was renamed into [LLC FC Metalist], which
resulted in the creation of the new club. In 2020/2021 season, [LLC FC Metalist]
based on the sporting principle was promoted to the First League of the Ukrainian
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REF FPSD-3193
Football Championship after winning the Second League. [LLC FC Metalist] was relicensed by UAF and was registered for participation in the First League of Ukrainian
Football Championship”;
•
“on 4 August 20221, Mr Yaroslavskyi was elected President of [LLC FC Metalist]”.
As to the sporting succession
“[…] UAF does not consider that [LLC FC Metalist] can be considered a successor to
[PJSC FC Metalist];
First of all, UAF does not find any connection, formal or de facto, between the
circumstances surrounding the termination of [PJSC FC Metalist] and the creation of
[LLC FC Metalist]. Among other things, [LLC FC Metalist]’s occasional de facto use
stating this year of some of the assets that used to belong or were used by [PJSC FC
Metalist], including those that were confiscated by the state of Ukraine and remain
state – and municipality – owned at this time and used only by third parties for four
years cannot indicate the existence of a sporting succession.
In addition, UAF did not and does not consider the process of terminating [PJSC FC
Metalist] as a deliberate way to get away from financial obligations, including
obligations towards players and other employees, and to ‘renew’ or ‘clean’ the football
club for its further revival.
[LLC FC Metalist] does play under the name of [PJSC FC Metalist], uses an identical
logo, similar colors and plays at the same stadium (the only stadium in Kharkiv that
can hot high-level matches). However, this is where the similarities between [PJSC FC
Metalist] and [LLC FC Metalist] end.
Firstly, [LLC FC Metalist] had other owners who are in no wat related to the previous
owner of [PJSC FC Metalist].
Moreover, [LLC FC Metalist] received an access to some of the assets that were owned
by [PJSC FC Metalist] from the municipal authorities. The state remains the owner of
the remaining part of assets for already four years.
In this regard, UAF also takes into account that under Ukrainian law based on special
confiscation procedure the assets of [PJSC FC Metalist] were transferred to the State of
Ukraine in criminal proceedings without any encumbrances and third party rights over
such assets. Preservation of the third party rights or encumbrances over such assets by
virtue of any contractual or regulatory provisions in principle contradicts the special
confiscation procedure and the principles of Ukrainian criminal law.
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Secondly, [PJSC FC Metalist] lost its status of a professional football club in 2016 when
it was stripped of its license. In its turn, [LLC FC Metalist] was created from the scratch.
It independently went through the licensing procedure without any attachment to [LLC
FC Metalist]. Under such conditions, UAF came to the unequivocal conclusion that [LLC
FC Metalist] had not acquired the license and any federative rights of [PJSC FC
Metalist].
Thirdly, [LLC FC Metalist] did not acquire or accept (nor it sought to acquire) any rights
from [PJSC FC Metalist], including any compensation for the training and development
of players, solidarity payments, transfers or sponsorship payments and other
entitlements to funds that belonged to [PJSC FC Metalist]. In this context, [LLC FC
Metalist] did not acquire any obligations of [PJSC FC Metalist]. In particular,
obligations to pay membership fees for participation in competitions under the
auspices of UAF, obligations towards sponsors of [PJSC FC Metalist], obligations to pay
for utilities, tax payments etc. To the contrary, [LLC FC Metalist] currently pays to
municipal authorities for using the [PJSC FC Metalist]’s stadium to host its home
matches, and will have to pay for the use of remaining assets that in the past belonged
to [PJSC FC Metalist] once the intended public-state partnership is established between
Mr Yaroslavskyi and the Kharkiv municipal authorities. Thus, UAF does not have the
impression that [LLC FC Metalist] is willing to be or can be legally bound by obligations
and be entitled to acquire any rights of [PJSC FC Metalist].
Fourthly, [LLC FC Metalist] was founded in 2019 without the apparent goal of
continuing the activities of [PJSC FC Metalist], which ceased to exist in 2016. Moreover,
ever since 2016, new football clubs have been emerging in Kharkiv. For instance, in
August 2016, SC Metalist was founded reportedly by [PJSC FC Metalist]’s owner Mr
Kurchenko. Moreover, since 2017, Kharkiv already had FC Metalist 1925, which
inherited part of [PJSC FC Metalist]’s club fans, players, coaching staff and football
academy.
That said, given the specific circumstances of this case, which differ significantly from
cases in light of civil proceedings, such as bankruptcy, the assets of one club were
transferred to another club or owner, there is no legal or sporting succession between
[PJSC FC Metalist] and [LLC FC Metalist].
Given the above, UAF believes that [LLC FC Metalist] cannot be considered a sporting
successor of [PJSC FC Metalist].”
25.
Upon confirmation that “FC Metalist Kharkiv” was currently affiliated to the UAF, the FIFA
general secretariat proceeded to send the player’s claim to the respondent for
comments.
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26.
On 27 August 2021, a copy of the claim was sent out by the FIFA general secretariat to
the
following
email
addresses:
[email protected];
[email protected];
[email protected]; [email protected]; [email protected], with copy to the
player. Cited e-mails were retrieved from the player’s claim and the information
included in the Transfer Matching System (TMS) by the club identified as “FC Metalist 1925”.
27.
On 30 August 2021, the player replied to the aforementioned correspondence and
stated inter alia as follows, in verbis:
“As discussed today over the phone, kindly take note that the relevant claim was filed
against FC Metalist Kharkiv, currently participating in Ukrainian’s second league (a.k.a.
1 Division), instead of Metalist 1925, currently participating in Ukrainian’s first league
(a.k.a. Premier League) and which happened to be the club notified, by mistake, of your
correspondence dated 27 August 2021.
Under such context and as requested, here follows the contacts of the correct
Respondent, FC Metalist Kharkiv, that we were able to assert accessing the internet:
• Adress: St. Plekhanovskaya, 65, Kharkov, 61001, Ukraine
• E-mails: [email protected] / [email protected]
Notwithstanding the above, we hereby kindly ask you to either confirm the
aforementioned information with the Ukrainian FA or to serve the relevant notice to FC
Metalist Kharkiv via such Member Association”.
28.
On 31 August 2021, the FIFA general secretariat requested the UAF further information
on the identity of the new club identified as “FC Metalist Kharkiv”. In particular, the UAF
was requested to confirm the contact details of the “new club” mentioned in its previous
letter of 26 August 2021.
29.
On 2 September 2021, the UAF forwarded to FIFA the contact details of LLC FC Metalist.
30.
On 3 September 2021, LLC FC Metalist was provided with a copy of the player’s claim
and invited to file its reply.
31.
On 17 September 2021, LLC FC Metalist (via its legal representatives) submitted a
request for information before the Ministry of Justice of Ukraine regarding the
bankruptcy procedure against PJSC FC Metalist.
32.
On 23 September 2021, LLC FC Metalist requested FIFA a suspension of its deadline to
submit its answer while it retrieved information before the competent state authorities
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REF FPSD-3193
in Ukraine (cf. the abovementioned letter dated 17 September 2021). Alternatively, LLC
FC Metalist requested a deadline extension until 4 November 2021.
33.
On the same date, i.e. 23 September 2021, the FIFA general secretariat granted LLC FC
Metalist a deadline extension until 13 October 2021. Furthermore, the Respondent was
informed that, due to the particularities of the case, a further extension could be
considered upon motivated request within said time limit.
b. Information provided by the Bankruptcy Trustee (6 October 2021)
34.
On 6 October 2021, the bankruptcy trustee, Ms Levkovych Olena Kononivna, provided
information to the Respondent on the developments of the proceedings involving PJSC
FC Metalist. A copy of said documentation was provided by the Respondent together
with its reply and it stated inter alia the following, in verbis:
“It should also be noted that by virtue of Article 16(15) of the [Bankruptcy Law] (as
in force at the time of the opening of proceedings) from the moment of initiation of
bankruptcy proceedings by unsecured and secured creditors claims against the
debtor and their satisfaction may be carried out only under the procedure
prescribed by this Law, and only within the bankruptcy proceedings. Thus, all the
claims that existed and exist against PJSC ‘Metalist’ should have been and should be
filed within the bankruptcy proceedings.
That said, all creditors of PJSC ‘Metalist’ had to file their claims until 11 July 2017 (i.e.
within 30 days from the date of official publication of the announcement of the
initiation of bankruptcy proceedings in relation to PJSC ‘Metalist’).
[…]
In accordance with Article 23(4) of the [Bankruptcy Law] (as in force at the time of
opening the proceedings) persons whose claims are filed after the term for their
submission expired, or not filed at all, shall not be qualified as unsecured creditors,
and their claims shall be repaid in sixth turn in the liquidation procedure. This rule
does not apply, inter alia, to creditors' claims for recovery of wages. That said, today
the creditors of PJSC ‘Metalist’ are not deprived of the right to file their claims for
recovery of wages within the bankruptcy procedure.
[…]
On 17 March 2020, the Commercial Court of Kharkiv Region in the case
No.922/1513/17 adopted the ruling approving the register of creditors' claims of
PJSC "Metalist". According to this ruling, the list of creditors included the following
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REF FPSD-3193
non-resident legal entities and individuals - Papa Gueye, Rodrigo Modesto ode Silva
Moledo, Willian Gomes de Siqueira, Diego de Souza Andrade, Cleiton Ribeiro Xavier.”
35.
On 8 October 2021, the Respondent requested FIFA another deadline extension and
was granted by the FIFA general secretariat until 27 October 2021 to file its position.
36.
On 27 October 2021, the Respondent filed its reply to the player’s claim.
37.
On 1 November 2021, the player was provided with a copy of the Respondent’s reply
and invited to file his rejoinder. Subsequently and upon substantiated request of the
player, he was also granted by the FIFA general secretariat a deadline extension until
26 November 2021.
38.
On 26 November 2021, the player filed his rejoinder.
39.
On 29 November 2021, the Respondent was invited to file its final comments. Following
a deadline extension request, its deadline was subsequently extended until 17
December 2021.
40.
On 17 December 2021, LLC FC Metalist filed its final comments on this matter.
41.
On 20 December 2021, the FIFA general secretariat informed the parties that the
submission-phase of the present matter was closed in accordance article 23 of the de
Procedural Rules Governing the Football Tribunal (hereinafter: the Procedural Rules).
c. The suspension of the proceedings
42.
On 23 March 2022, the FIFA general secretariat informed the parties, on behalf of the
Chairperson of the DRC and due to the exceptional situation deriving from the war in
Ukraine, that these proceedings were suspended with immediate effect until 30 June
2022.
43.
In July 2022, the proceedings were resumed and the parties accordingly informed that
the case would be submitted to the DRC on 29 August 2022.
IV.
SUBMISSIONS OF THE PARTIES
44.
A brief summary of the position of the parties is detailed in continuation. For the sake
of completeness, the below outline is illustrative only and does not necessarily
comprise every contention put forward by the parties. The DRC, however, has carefully
considered all the submissions and evidence on file, even if there is no specific
reference to those submissions or evidence in the following summary.
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REF FPSD-3193
a. Claim of the player (29 July 2021 and 12 August 2021)
45.
According to the player, the Employment Contract was terminated with just cause due
to overdue payables by PJSC FC Metalist. Furthermore, due to the occurrence of
sporting succession, LLC FC Metalist should now be liable to the consequences of such
breach.
46.
In particular, the player made inter alia the following remarks as to the sporting
succession, in verbis:
“[…] the Claimant has noted that the New Club basically meets all fundamental criteria
established in Article 15, Par 4. of the FIFA Disciplinary Code for purposes of asserting
a sporting successor, as follows:
1. Name and History
FC Metalist was founded in 1925 and accomplished a number of remarkable sporting
achievements either at a national and international levels (Exhibit no. 4). In 2016, once
faced with severe financial distress, FC Metalist lost its affiliation with the Ukrainian
Association of Football. However, on 16 June 2021, the Executive Committee of the
Ukrainian Association of Football granted the New Club permission to use not only the
symbols but also the name of FC Metalist (Exhibit no. 5).
2. Shield, Colours and Uniforms
In what the New Club's shield concerns, the Ukrainian Association of Football granted
permission for it to use the exact same shield (Note: with the same colours) of FC
Metalist (Exhibit no. 6). Moreover, with regard to the New Clubs' uniform, it remains
extremely similar, being yellow the predominant colour. Useless to say that it is perfectly
common for football clubs to change their uniforms on a yearly basis for merchandising
purposes, hence the slight differences being actually irrelevant.
3. Headquarters and Stadium
Another relevant element that sustains the sporting succession of FC Metalist by the
New Club is the address. In fact, according to UEFA 2015/16's first division clubs address
list, FC Metalist's address was Plekhanivska Str. 65, UA-61001 Kharkiv (Exhibit no. 7),
whereas the New Club's official website shows the exact same address (Exhibit no. 8).
Finally, as for the stadium, the New Club is also using the same stadium of FC Metalist
(Exhibit no. 9).
4. Fans and Social Network Platforms
In this respect, taking into consideration the New Clubs' social network platforms,
particularly its Facebook account, one can easily conclude that it inherited FC Metalist's
fanbase, having already more than 60.000 followers (Exhibit no. 10).
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REF FPSD-3193
5. Recognition by third parties
As important as the conclusions that anyone can easily reach from all the above are
the public statements made on 24 February 2021 by Mr Andriy Pavelko - President of
the Ukrainian Association of Football ("I learned with great inspiration about the
letteraddress of the president of the legendary FC "Metalist" Oleksandr Yaroslavsky to
the authorities of Kharkiv region with a proposal to unite with all concerned
compatriots and loyal fans and revive the real heroic FC "Metalist". [. . .] I believe that
in the near future the Kharkiv club, founded in 1925, a club with such a glorious history
will once again enchant us with its game in the UP L, the Cup of Ukraine and the
European Cups" (Exhibit no. 11) or on 16 June 2021 by Mr Oleksandr Yaroslavsky President of FC Metalist between 2005 and 2012 and also since 12 June 2021 ("As I
promised, we are reviving our beloved Metalist with all possible and impossible speed.
First, they returned their symbols, and today, by the decision of the UAF executive
committee, the historical name of the club" (Cf. Exhibit no. 5 and Exhibit no. 12).
Under such general context, following the content of Article 15, Par. 4 of the FIFA
Disciplinary Code which clearly establishes the "[. . .] Criteria to assess whether an entity
is to be considered as the sporting successor of another entity are, among others, its
headquarters, name, legal form, team colours, players, shareholders or stakeholders
or ownership and the category of competition concerned" and the well-established
jurisprudence of the Court of Arbitration for Sports ( CAS) such as the one resulting from
procedure 2016/A/4550, it is clear that ‘A club is a sporting entity identifiable by itself
that, as a general rule, transcends the legal entities which operate it. [...] The
identity of a club is constituted by elements such as its name, colours, fans, history,
sporting achievements, shield, trophies, stadium, roster of players, historic figures,
etc. that allow it to distinguish from all the other clubs. Hence, the prevalence of
the continuity and permanence in time of the sporting institution in front of the
entity that manages it has been recognised, even when dealing with the change of
management companies completely different from themselves.’
In conclusion, the Claimant deems that the New Club is undoubtedly the sporting
successor of FC Metalist, the reason why we hereby kindly request for the file to be reopen and submitted to the attention and consideration of the Dispute Resolution
Chamber, for a formal decision.
47.
Against this background, the player requested to be awarded the following amounts:
• USD 159,142 as outstanding remuneration, broken down as follows:
-
USD 7,142 as the pro rata salary of February 2015;
USD 25,000 as the salary of April 2015;
USD 25,000 as the salary of May 2015;
USD 25,000 as the salary of June 2015;
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REF FPSD-3193
- USD 75,000 as the sign-on fee payable on 15 May 2015; and
- USD 2,000 as the accommodation allowance for the months of March,
April, May and June 2015.
• USD 300,000 as compensation for breach of contract, corresponding to the
residual value of the Employment Contract (i.e. 12 months of salaries, being
USD 25,000 each); and
• “the costs in which he incurred with his return flight ticket to Portugal, which
amount and respective receipt will be carried to the file in due course”.
48.
Additionally, the player also claimed to be entitled to 5% interest p.a. over the
outstanding remuneration as from the respective due dates; as well as requested
sporting sanctions to be imposed on the Respondent in line with article 17, par. 4 of
the FIFA Regulations on the Status and Transfer of Players (RSTP).
b. Reply of LLC FC Metalist (27 October 2021)
49.
In its reply, LLC FC Metalist thoroughly recalled the factual background behind inter alia
(i) the bankruptcy of PJSC FC Metalist; (ii) the signature of the Employment Contract
between PJSC FC Metalist and the player within this context; (iii) the creation of FC
Metalist 1925, SC Metalist, and LLC FC Metal; and, finally, (iv) the creation of LLC FC
Metalist as a new independent club. What is more, LLC FC Metalist provided a myriad
of evidence in this respect, which corroborated the information provided by the UAF.
50.
Specifically in connection to the case at stake, LLC FC Metalist clarified that: “because
the payment of salaries was conducted by [PJSC FC Metalist] in cash, and because [LLC FC
Metalist] cannot have access to the records of [PJSC FC Metalist], it is unclear whether [PJSC
FC Metalist] actually failed to pay the salaries as alleged by the player”.
51.
Against this framework cf. par. 3 of its submission, LLC FC Metalist’s can be summarized
as follows:
“(i) The Player’s claim is inadmissible because it is time-barred both under the FIFA RSTP
and Swiss law. The Player’s claim has been filed more than six years since the events
giving rise to the dispute, i.e. the termination of the Employment Contract allegedly with
just cause.
(ii) Moreover, the Player’s claim is filed against the wrong party, i.e. FC Metalist, which
did not exist in 2015 when the Employment Contract was concluded (and terminated).
FC Metalist appeared in 2021 as a result of the renaming of FC Metal, which was
founded in October 2019. FC Metal had nothing to do with the Bankrupt PJSC Metalist,
which lost his affiliation with the Ukrainian Association of Football (“UAF”) in summer
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REF FPSD-3193
2016 (more than 3 years before FC Metal was founded) and went into bankruptcy
proceedings in July 2017.
(iii) By no means can the Respondent be regarded as the sporting successor of the
Bankrupt PJSC Metalist. It is true that, in June 2021, FC Metal was renamed to FC Metalist
upon the approval of the UAF. However, as will be discussed below, the rebranding of
FC Metal does not mean that it must now be considered the sporting successor of the
Bankrupt PJSC Metalist and, as a result, liable for debts incurred by that club (more
than six years previously).
(iv) Finally, the Respondent also submits that, even if it is considered, the Claimant’s
case on the merits is bound to fail, as the Player did not participate in the national
bankruptcy proceedings of the Bankrupt PJSC Metalist and therefore, based on the wellestablished jurisprudence of FIFA and CAS, his claim must be dismissed due to the lack
of diligence in collecting the debt in the bankruptcy proceedings.”
A.
52.
Admissibility
First and foremost, LLC FC Metalist mentioned that the claim of the player should be
ruled inadmissible. In this respect, it highlighted that:
As per article 25, par. 5 of the FIFA RSTP (February 2021):
• the statute of limitation of 2 years began to run on 9 July 2015 i.e. when the
player unilaterally terminated the employment contract;
• case ref. 15-01589/ebo was closed and the case at hand is to be treated as a
new claim. As such, more than 2 years have elapsed from the event giving
rise to the dispute entailing that the claim of the player is time-barred; and
• the issue of the sporting succession does not change the aforementioned
conclusion, and this view is supported by the DRC’s practice (e.g. Paunel case,
decision of 17 June 2020).
As per Swiss Law:
• in accordance with article 128 (3) of the Swiss Code of Obligations (SCO), the
time limit of contractual claims arising from employment contracts (such as
the one sub judice) is 5 years;
• the time limit was not interrupted by the First Claim insofar as FIFA did not
enter into the merits of the matter i.e. “the FIFA decision can be assimilated
Page 20
REF FPSD-3193
mutatis mutandis to a decision of inadmissibility and therefore cannot validly
interrupt the relevant time limit pursuant to Article 138 (1) SCO”; and
• “it follows that the player’s request to “reopen” the case (on 28 July 2021) against
[LLC FC Mestalist] intervenes more than 5 years after the termination of the
employment contract. Hence, (also) under Swiss Law the player’s claim is clearly
time-barred”.
B.
53.
Substance
Alternatively, LLC FC Metalist also entered into the substance of the matter.
(B.1) The sporting succession
54.
Initially, LLC FC Metalist argued that – insofar as article 15, par. 6, of the FIFA Disciplinary
Code is inapplicable to this case – the concept of sporting succession should be defined
in light of the jurisprudence of the DRC and CAS.
55.
With the above in mind, LLC FC Metalist based its argumentation on case ref. CAS
2020/A/7092 (hereinafter: the Parma Case), to which it adhered. In doing so, it
explained that “when deciding on a sporting succession it should be established (1) whether
there is an abuse in termination of the old club and creation of the new club, and (2) whether
the new club demonstrates sporting continuity of the old club’s activities”. As to the sport
continuity, LLC FC Metalist further added that the analysis should take into
consideration “other subsidiary factors, including colours, logos, headquarters, players,
legal form, shareholders and history”.
56.
On this note, LLC FC Metalist made, inter alia, the following remarks:
Existence of an abuse:
• “the facts described above clearly indicate that there is no abuse or unscrupulous
intention behind the bankruptcy of PJSC FC Metalist and creation of LLC FC Metalist.
There is no connection, formal or de facto, between the circumstances surrounding
the termination of PJSC FC Metalist and the creation of LLC FC Metal (and then LLC
FC Metalist);
• “in 2017 [PJSC FC Metalist] went bankrupt as a result of actions of Mr Kurchenko
[…] Notably, two months after the bankruptcy proceedings in relation to [PJSC FC
Metalist] were commenced, the assets of [PJSC FC Metalist] were confiscated in the
course of criminal proceedings against Mr Kurchenko. [LLC FC Metal] was created
two years after the bankruptcy proceedings were initiated […] with an aim to set an
independent course of development”;
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REF FPSD-3193
• “it was not until 2021, four years after the commencement of bankruptcy
proceedings, that [LLC FC Metal] started to partially rely on the Metalist brand when
Mr Yaroslavskyi joined [LLC FC Metal]. However, neither the assets of [PJSC FC
Metalist] nor its brand was used. Only drom 2021 did [LLC FC Metal] start to use
Metalist stadium (the only stadium in Kharkiv that can host high-level matches and
host large numbers of spectators) to host its home matches in the Second League in
2021 and the [LLC FC Metalist] – in the First League of Ukrainian Championship for
the season 2021/2022”;
• “[LLC FC Metalist] received an access to the stadium via a remunerative services
contract with Kharkiv municipal authorities operating the stadium. [LLC FC
Metalist] has to pay the municipal authorities for use of the stadium to host its home
matches, as do the other clubs performing in Kharkiv - FC Metalist 1925 and FC
Shakhtar Donetsk. Moreover, [LLC FC Metalist] will have to pay for the use of
remaining assets that in the past belonged to [PJSC FC Metalist] should the intended
public-state partnership be established between Mr. Yaroslavskyi and the Kharkiv
municipal authorities. This is because [LLC FC Metalist] does not own the assets of
[PJSC FC Metalist]. These assets have been and remain owned by state and
municipal authorities following the special confiscation measures. For four years of
their municipal and state ownership, these assets have been used by third parties,
including football clubs (e.g. [FC Metalist 1925])”; and
• Therefore, “the process of terminating the [PJSC FC Metalist] was not a deliberate
way for the [PJSC FC Metalist] to avoid financial obligations, including obligations
towards players and other employees, and to "renew" or "clean" the sporting
activities via [LLC FC Metalist]”.
Sporting continuity:
• “[LLC FC Metalist] has never owned the [PJSC FC Metalist]’s assets and only uses
limited amount of its assets via contractual relations with its new owners - state and
municipal authorities”;
• “there is no basis to conclude that [LLC FC Metalist] continues or intended to
continue the sporting activities of [PJSC FC Metalist]”. In particular, LLC FC Metalist
“was created from scratch, it independently went through the UAF licensing
procedure without any attachment to the [PJSC FC Metalist]. It did not acquire the
license nor any federative rights of the [PJSC FC Metalist]”;
• LLC FC Metalist did not acquire any rights from PJSC FC Metalist and “has to pay
municipal authorities for use of the Metalist stadium to host its matches, and will
have to pay for the use of any remaining assets that in the past belonged to [PJSC
Page 22
REF FPSD-3193
FC Metalist] if the intended public-state partnership is established between Mr
Yaroslavskyi and the Kharkiv municipal authorities”; and
• Therefore, "there is no basis to conclude that [LLC FC Metalist] acquired or
intended to acquire the [PJSC FC Metalist]’s sportive distinctive traits with the
intention to continue the [PJSC FC Metalist]’s sporting activity.
Other factors:
•
Name, trademarks and colours: LLC FC Metalist uses the Metalist trademark,
including its name, logo and similar colours – which were accordingly taken
from “the open market due to and after, the expiration of the term of protection of
intellectual property rights” (i.e. according to the Respondent, since 16 July 2018,
“the rights to logo and brand (trademark) became no longer protected under
Ukrainian Law and any other interested person or entity could potentially apply for
registration and use of these intellectual property rights”;
In addition, “the Respondent recognises that the name and trademark of "Metalist"
are somewhat relevant. However, they cannot be considered on their own as
decisive factors in finding sporting succession, similar to the assessment made by
the CAS Panel in the Parma case, particularly in circumstances where there exists
two other "Metalists" in Kharkiv. First, there is [FC Metalist 1925], which exists since
2016, being immediately created following departure of the [PJSC FC Metalist] from
the UAF organized competitions. Second, there was [SC Metalist], created by Mr.
Kurchenko proxies in 2016 to continue activities of the [PJSC FC Metalist]”.
In accordance with LLC FC Metalist, the same applies to the colors, as they are
historically linked to the Ukrainian flag and the city of Kharkiv. Furthermore, the
same colors are used by FC Metalist 1925 and were the colours of LLC FC Metal.
Likewise, under alleged similar circumstances while analyzing the sporting
succession of FC Dnipro, the DRC arrived at conclusions that “identity in the
colours, name stadium, fans may not be relevant should other circumstances
outweigh the balance”.
•
Headquarters and Stadium: both LLC FC Metalist and FC Metalist 1925 are
registered at the address of the Metalist Stadium, which is shared by both clubs
while remains a municipal stadium. Therefore, no assumptions shall be made
in this regard.
•
Legal Form: LLC FC Metalist was created as limited liability company while PJSC
FC Metalist was a public joint-sotck company, therefore they have different
legal forms.
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REF FPSD-3193
57.
•
Players: none of the PJSC FC Metalist first team players immediately joined LLC
FC Metal, whose squad was formed “independently with players from other clubs”
– corroborating with the allegation that the creation of LLC FC Metal / LLC FC
Metalist “was not aimed to eliminate debts”.
•
Shareholders and management: “there are no similarities with ownership and
management with [PJSC FC Metalist]”. LLC FC Metal was independently
established, and the sole owner was not related to PJSC FC Metalist. What is
more, the club is currently owned by the same investor, with Mr Yaroslavskyi
being “its core investor and president”.
•
Category of competition concerned: in the 2015/2016 PJSC FC Metalist was
relegated to the Ukrainian Premier League. On the other hand, LLC FC Metal
started its participation in the lower Ukrainian professional league in the
season 2020/2021;
•
Reliance on the history of PJSC FC Metalist: there is not enough evidence
suggesting that LLC FC Metalist relies on the history of PJSC FC Metalist and the
documentation provided by the player is not conclusive in this respect. Despite
becoming identified with PJSC FC Metalist after the rebranding and joining of
Mr Yaroslavskyi, LLC FC Metalist there is a bright distinction between the eras.
For the Respondent, it is natural, in this regard, to have similarities taking into
consideration Mr Yaroslavskyi’s history and intention to “get a similar successful
result by building the FC Metalist team and academy from the scratch”;
•
Trophies: LLC FC Metalist does not own any cups and trophies won by PJSC FC
Metalist; and
•
Recognition by third parties: neither UEFA nor UAF recognizes LLC FC Metalist
as the sporting successor of PJSC FC Metalist.
Based on the foregoing, LLC FC Metalist concluded that “there are no grounds to find [it]
as a sporting successor of [PJSC FC Metalist]. There was no abuse, circumvention or other
circumstances triggering the application of sporting succession, and the Claimant did not
(and could not) present evidence demonstrating the contrary”.
(B.2) The player’s lack of diligence
58.
Without prejudice of the allegations as to sporting succession, LLC FC Metalist
maintained that the player’s claim should be dismissed due to his lack of diligence.
59.
In this respect, the player referred to CAS jurisprudence and stressed that “when a
creditor (for instance a player, coach or football agent) has failed to exercise its due diligence
Page 24
REF FPSD-3193
requirement, i.e. has failed to file its claim in the national bankruptcy proceedings of the
previous club, this creditor is precluded from bringing the case in front of the FIFA bodies
against the new club invoking sporting succession”.
60.
LLC FC Metalist pointed out that the bankruptcy proceedings against PJSC FC Metalist
were announced by the Supreme Economic Court of Ukraine and “widely reported in the
international press (in English)”. At this point, the Respondent referred to the information
provided by the bankruptcy trustee and argued that “the player did not file his claim in
the bankruptcy proceedings and chose to remain passive. On the contrary, other foreign
players filed their claim and, hence, were duly registered in the list of creditors of PJSC FC
Metalist. In conclusion, claim for compensation to a sporting successor is precluded in case
the claimant contributed to the non-performance of the obligation, and in particular failed
to file the claims in the bankruptcy proceedings”.
(B.3) The violation of the public order of Ukraine
61.
Finally, LLC FC Metalist stated that “paying debts on behalf of [PJSC FC Metalist] would
likely be considered contrary to the Public Order of Ukraine”.
62.
In this respect, the Respondent pointed out that Mr Kurchenko is under sanctions
regime of European Union, Canada, and the USA – including the suspension of his
economic and financial obligations. Consequently, “given that within the context of the
bankruptcy proceedings of PJSC FC Metalist, Mr Kurchenko could be jointly and severally
liable for non-fulfilment of financial obligations of the PJSC FC Metalist , the fulfilment of
such an obligation by a third party would likely be in violation of the regime of personal
sanctions. In other words, if any third party, including [LLC FC Metalist], pays the debt of
[PJSC FC Metalist] (Mr Kurchenko), this party would be in violation of the sanctions regime
if the court in the pending bankruptcy (liquidation) proceedings finds Mr Kurchenko to be
jointly and severally liable”.
63.
Therefore, LLC FC Metalist is of the opinion that any decision to pay the debt of PJSC FC
Metalist would be contrary to the public order of Ukraine.
C.
64.
The requests for relief
In view of the foregoing, the requests for relief of the Respondent were as follows, in
verbis:
“(1) To confirm that the claimed filed by [the player] is not admissible.
(2) Alternatively, to dismiss the claim filed by [the player] on 12 August 2021 in its
entirety.
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REF FPSD-3193
(3) In any event, to confirm that Football Club “Metalist” Kharkiv LLC is not a sporting
successor of Public joint-stock company “Football Club ‘Metalist’”.
(4) To order [the player] to pay the full FIFA procedural costs, if any”.
c. Rejoinder of the player (29 November 2021)
65.
The player opposed LLC FC Metalist’s position as follows.
A.
Admissibility
66.
In accordance with the player, the event giving rise to the dispute is not the termination
of the employment contract, rather “the reappearance of the Respondent in the robes of
[PJSC FC Metalist]”. He also referred to CAS jurisprudence on the matter (CAS
2020/A/7290) to substantiate his conclusion.
67.
In addition, the player moreover outlined that “the Respondent only restarted to compete
on 1 July 2020, i.e. at the beginning of the 2020/2021 Ukrainian sporting season, after being
granted with a ‘special license’ for that purpose by the [UAF]”. As such, the player strongly
opposed the Respondent’s position as to the statute of limitations and stressed that 2
years had not elapsed since the Respondent’s reappearance.
68.
Subsidiarily, the player argued that LLC FC Metalist was founded on 10 October 2019,
therefore the time limit to file the claim under such scenario would be 10 October 2021.
69.
Furthermore, even if considered that the time limit starter running as from the date of
the termination of the employment contract, the claim would still be admissible insofar
as the time limit was interrupted in line with article 134, par. 6 and 138 of the SCO. As
such, the player considered that cited time limit was “suspended” as from the
disaffiliation of PJSC FC Metalist and lifted when the Respondent resumed its
participation at the beginning of the 2020/2021 season – meaning that any claim
lodged until 1 July 2022 would be admissible.
B.
Substance
(B.1) The sporting succession
70.
Having established the above, the player continued with the analysis of the sporting
succession. Alike the Respondent, the player also collected references from CAS
jurisprudence and referred to the wording of the FIFA Disciplinary Code and FIFA RSTP
(August 2021 edition).
71.
Thereafter, the player challenged the Respondent’s argumentation inter alia as follows:
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REF FPSD-3193
• Sporting continuity: conversely to what was stated in the reply, LLC FC Metalist
clearly intends to continue the activity of PJSC FC Metalist, as well as it keeps
using the same identification for the purposes of “arranging and conducting its
affairs and activities”. The player filed additional evidence in this respect,
including references to statements published by Mr Yaroslavskyi according to
which he, inter alia, manifested his desire to revive the old club;
Additionally, the player underlined that it is also “the view and belief of the general
public that the Respondent and [PJSC FC Metalist] are exactly the same person” –
what is deemed to be essential, in accordance with CAS jurisprudence, for the
recognition of a sporting succession;
• Legal form: although the Respondent operates under a different legal entity
from the one of PJSC FC Metalist does not constitute a relevant factor for the
purposes of ascertaining the sporting succession, “otherwise it would be quite
easy to circumvent the applicable FIFA Regulations and waive any responsibility as
sporting successor”;
• Competition category: apart from referring to the irrelevance of such
information, the player highlighted that LLC FC Metalist “never had the status of
an amateur club, never competing in an amateur competition”. Therefore, “the
Respondent was granted a ‘special’ license by [the UAF] to compete in the third tier
of professional football in Ukraine, the ‘Second League’, the reason why it never went
through the amateur ranks of Ukrainian football, as [FC Metalist 1925] did”;
• Headquarters: LLC FC Metalist confirmed that it shares the same address and
stadium as the old PJSC FC Metalist (despite being shared with FC Metalist 1925);
• Social media: LLC FC Metalist’s social media is used to develop fan engagement
and to establish a strong identifying connection with the club’s stakeholders.
Accordingly, the player pointed out that:
-
Official website: the Respondent’s website is exactly the same as PJSC FC
Metalist, showing an “umbilical link” between each other. It refers to
information older than the foundation of LLC FC Metalist;
-
Facebook: the Respondent’s has an incredible popularity that cannot be
justified for a club recently established rather than being inherited from
PJSC FC Metalist. Moreover, there are also news referring to years as far
back as 2015, 2014 and 2013 i.e. before the constitution of LLC FC Metalist;
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REF FPSD-3193
-
Instagram: the account was created on 23 January 2013, again before the
constitution of LLC FC Metalist. Moreover, it also seems to be in possession
of the old club followers; and
-
Twitter: the account was also created in 2009 i.e. 10 years later than LLC FC
Metalist’s constitution.
•
Name and history: conversely to the Respondent’s argumentation, the general
public, as well as the Ukrainian official entities, see LLC FC Metalist as the continuity
of PJSC FC Metalist;
•
Team colors and crest: LLC FC Metalist uses the same name, logo and colors of PJSC
FC Metalist – what clearly demonstrates its intention “to continue [PJSC FC Metalist]’s
activity, holding the latter’s most important identifying elements”;
•
Players, shareholders, stakeholders, owners, and management:
-
5 years have passed since PJSC FC Metalist went bankrupt therefore “the
player at the time had to leave and find other clubs to proceed with their sporting
careers”. Nevertheless, one important defender, Mr Papa Gueye, was hired
as the Sporting Director of the club – demonstrating the sporting continuity;
-
There is no need to demonstrate who was liable for the club’s bankruptcy,
but rather the sporting succession, therefore the Respondent’s allegations
in this regard are irrelevant;
-
Mr Yaroslavskyi was the president of PJSC FC Metalist and is now the
president of LLC FC Metalist. Moreover, his intentions to revive “the beloved
FC Metalist” are clear;
-
Mr Yevgen Krasnikov (hereinafter: Mr Krasnikov) was the Director of
Football of PJSC FC Metalist and is now the vice-president and main investor
of LLC FC Metalist; and
-
The number of followers of the Respondent in social media corroborate that
the stakeholders consider LLC FC Metalist as the successor of PJSC FC
Metalist.
(B.2) The player’s lack of diligence
72.
At this point, the player firstly maintained that the jurisprudence quoted by LLC FC
Metalist in support of its allegations “cannot be applied to the present case, as the
Page 28
REF FPSD-3193
procedures enhanced by the Respondent are not comparable or miss any degree of
similarity”.
73.
As opposed to what was suggested by the Respondent, the player stated that he has
acted diligently when attempting to collect the outstanding amounts by PJSC FC
Metalist (and now LLC FC Metalist). In particular, the player referred to his previous
claim lodged before the FIFA DRC and claimed that – at that time – there were no other
legal remedies available insofar as the bankruptcy proceedings only commenced on 9
July 2017. The player did also refer to FIFA and CAS jurisprudence on the matter.
74.
In continuation, the player insisted that he was not aware and could not reasonably be
aware of the bankruptcy proceedings of PJSC FC Metalist. On this topic, the player
clarified the following:
• after the termination of the employment contract, he proceeded with his career
in Spain (Sociedad Deportiva Ponferradina), and was subsequently transferred
to Romania (Gaz Metan), however never returned to Ukraine;
• when the bankruptcy proceedings against PJSC FC Metalist started, more than 2
years had elapsed since he had left Ukraine;
• contrary to what was suggested by LLC FC Metalist, the bankruptcy proceedings
were not widely reported by international media (and the Respondent did not
substantiate its argumentation). Even so, the player could not be expected to
follow such news since he had already left the country 2 years before and could
not understand the national language;
• it could not be expected either that the player would have access to the website
of the Supreme Economic Court of Ukraine, nor be aware of his alleged
obligation to file a claim before the ordinary courts within 30 days of the cited
official bankruptcy announcement; and
• the fact that other foreigners’ players allegedly filed their claims before the court
is misconceived because “no one knows for sure, and the Respondent certainly
does not explain it either, how said players knew or who could have informed them
in respect of the bankruptcy procedure. Each person’s case is a different case, the
reason why one cannot compare the Claimant’s case with other’s if any actually
existed”. Furthermore, three of the players indicated in the list are Brazilian and
played for Brazilian clubs after being employed by PJSC FC Metalist meaning that
they could have been in possession of the same information.
75.
Therefore, the player concluded that “he has made use of all the available remedies at his
disposal at the time, hence acting with the diligence required within the context of the
present dispute”.
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(B.3) The violation of the public order of Ukraine
76.
Finally, the player stressed that the sanctions imposed on Mr Kurchencko bear no
relevance to the case at stake because “those are, as the Respondent mentioned, personal
sanctions thus not affecting other natural or legal persons”.
77.
The player added that the joint liability of Mr Kurchencko is a possibility only, which
could not affect him and therefore could not be contrary to the public order of Ukraine.
C.
78.
The requests for relief
After recalling his conclusions, the players’ request for relief were as follows, in verbis:
“A. Confirm that the claim is admissible;
B. Establish that the Respondent is the sporting successor of [PJSC FC Metalist];
C. Establish that the Claimant acted with the necessary diligence to claim his labour
credits;
D. Establish that the Claimant has unliterally terminated [the employment contract]
with just cause;
E. Condemn the Respondent to pay to the Claimant his contractual outstanding
remuneration in the total amount of USD 157.142,00 (one hundred and fifty-nine
thousand and one hundred and forty-two US Dollars);
F. Condemn the Respondent to pay to the Claimant the costs in which the latter has
incurred with his return flight ticket to Portugal in the approximate amount of USD
200,00 (two hundred US Dollars);
G. Condemn the Respondent to pay to the Claimant the accommodation allowances of
March, April, May and June 2015, in the total amount of USD 2.000,00 (two thousand
US Dollars);
H. Condemn the Respondent to pay to the Claimant a financial compensation for all the
damages suffered by the latter as a consequence of its repetitive and serious
contractual breaches during the contractual Protected Period, in an amount
corresponding to the entire contractual remuneration established until the end of the
Contract, totalizing USD 300.000,00 (three hundred thousand US Dollars);
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I. Condemn the Respondent to pay to the Claimant a financial compensation in view of
its repetitive and serious contractual breaches during the contractual Protected Period,
in the amount of USD 75.000,00 (seventy-five thousand US Dollars) corresponding to 3
monthly salaries;
J. Condemn the Respondent to pay to the Claimant default interest at the rate of 5%
p.a. over the amount mentioned in the previous Lits. E, F, G & H;
K. Impose a sanction on the Respondent consisting on a ban from registering any new
players, either nationally or internationally, for 2 (two) entire and consecutive
registration periods, in accordance with Article 17 Par. 4 of the RSTP, as a consequence
of its relevant contractual breaches during the Protected Period”.
d. Final comments of the club (17 December 2021)
79.
As a preliminary remark, LLC FC Metalist disputed the player’s allegation that – by not
specifically addressing the issue of the termination of the Employment Contract – the
Respondent had tacitly accepted its veracity. On the contrary, it argued that the claim
was filed against the wrong party (i.e. no sporting succession), hence that the player’s
requests should in fact be considered as contested.
80.
In addition, LLC FC Metalist underlined the player’s request for additional
compensation of EUR 75,000, which should be considered “an opportunistic and belated
way to revive his time-barred claim without having acted before any competent national
authorities for years against his genuine debtor”.
81.
Subsequently, the Respondent commented on the admissibility and substance of the
claim, as follows.
A.
Admissibility
82.
According to LLC FC Metalist and on the basis of article 130 (1) of the SCO and CAS
jurisprudence, the event giving rise to the dispute should be the moment the debt
became due (i.e. 9 July 2015) and not the date of its affiliation to UAF.
83.
Furthermore, LLC FC Metalist added that the time limit was not interrupted by the
previous claim of the player insofar as article 138 of the SCO: (i) “only refers to civil claims
filed before public courts and not to internal proceedings such as those before the FIFA DRC;
and (ii) is not applicable when the court dismisses the case based on inadmissibility i.e.
without deciding on the merits. Furthermore, LLC FC Metalist pointed out that FIFA’s
letter dated 19 August 2016 was qualified as a decision on inadmissibility, therefore
the cited article 138 of the SCO could not be applicable. Likewise, it claimed that the
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player had different legal options against PJSC FC Metalist between August 2016 and
August 2021, to no avail.
84.
Consequently, the Respondent reiterated its position that the claim “is time-barred
based on the FIFA rules and regulations, CAS jurisprudence and also from the Swiss Law
perspective”.
B.
Substance
(B.1) The sporting succession
85.
LLC FC Metalist subsequently rebutted the player’s position as to the sporting
succession, as follows:
• Social media: the player’s allegations must be relativized “as social media
accounts / website is one element (and not the most relevant) in assessing the
sporting succession”. Moreover, the player did not prove that its social media
were inherited from PJSC FC Metalist and, had that been the case, PJSC FC
Metalist’s accounts would have been transferred to the ownership of the state
of Ukraine based on the order of the Cabinet Ministers of Ukraine dated 11 April
2018;
“In reality, the current social media accounts were provided to the Respondent by
fans of football in Kharkiv who have been operating them since the creation”;
• Website: the player “fails to elaborate on what specifically in the Respondent’s
website links the Respondent to [PJSC FC Metalist”. In this respect, the reference to
the stadium was wrong as it has hosted for many seasons the matches of
several Ukrainian clubs. What is more, the reference to the same history of the
stadium is included on the website of FC Metalist 1925 and “is not per se a
relevant factor to assess sporting succession especially if, as in the present case, the
stadium is shared by several clubs”;
• Ownership and management: the player’s allegations are misleading, especially:
(i) Mr Yaroslavskyi is only the president and not the owner of the Respondent;
(ii) Mr Krasnikov is the current owner and founded the new club (i.e. LLC FC
Metal, now LLC FC Metalist), without any intention to revive the old LLC FC
Metalist; and (iii) Papa Gueye is a legendary player associated to the Ukrainian
football as a whole, hence does not imply any link with PJSC FC Metalist’s history;
and
• License: contrary to what was suggested by the player, it was not granted a
special license. Instead, its license was granted by the UAF in the context of the
COVID-19 outbreak and it met “all required objective license requirements”.
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Moreover, there is not any evidence that the UAF took into consideration the
history of PJSC FC Metalist when granting the license.
86.
Having established the above, LLC FC Metalist reiterated its argumentation as to the
other factors linked to the sporting succession as per its reply brief (i.e. legal entity and
form, shareholders and overall management, players coaches and technical
employees, credits / benefits, sporting status, etc.). By doing so, it concluded that such
elements “demonstrate a situation of no sporting succession” – especially when
considered the situation with FC Metalist 1925, which could be – in its opinion –
considered as the correct sporting successor of PJSC FC Metalist.
87.
Consequently, LLC FC Metalist concluded that the claim was filed against the wrong
party.
(B.2) The player’s lack of diligence
88.
Alternatively, the Respondent once again asserted that the due diligence requirement
is a decisive faction on this matter.
89.
On this note, it initially contested the player’s position as to the matter of law /
jurisprudence. In particular, LLC FC Metalist referred to the “cornerstone of all
bankruptcy proceedings around the world”: to assure the equal treatment of the
creditors. As such, it mentioned that “to allow the Claimant to recover his claim before the
FIFA bodies (regardless of whether he acts within the disciplinary proceedings or not), while
he remained completely passive in the national bankruptcy proceedings, would clearly
breach the above principle insofar as other foreign players acted diligently and were actually
listed as creditors in the bankruptcy proceedings. The FIFA adjudicatory bodies should not
serve as a convenient forum for those players who failed to be diligent in seeking to recover
their claims at the national level or at all”.
90.
The Respondent furthermore pointed out that the player’s argumentation was
contradictory since he firstly referred to article 15, par. 4 of the FIFA Disciplinary Code
on the topic of sporting succession and then failed to explain why such provisions (now
mirrored to article 25 of the FIFA RSTP, August 2021 edition) should not be applicable
to the extent of the creditor’s diligence.
91.
Also regarding the expected diligence of the player, LLC FC Metalist insisted that the
player should have been aware of the bankruptcy proceedings. In this connection, it
mentioned:
• when FIFA’s letter of 19 June 2016 was issued, there were strong indications that
PJSC FC Metalist would be soon declared bankrupted;
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• there were several other press releases and medial articles, in multiple
languages, regarding the commencement of bankruptcy proceedings (including
in Spain, where the player was subsequently employed); and
• the official publication of the Supreme Economic Court of Ukraine was publicly
accessible on internet.
92.
Therefore, “the due diligence requirement imposed on the player is clearly not met in the
present case. Thus, and irrespective of the assessment of the sporting succession, the
player’s claim must be rejected”.
(B.3) The Employment Contract between the player and PJSC FC Metalist
93.
Based on the documentation provided by the player, LLC FC Metalist also added that
the player did not provide adequate calculation regarding the conversion of the
amounts claims in USD to UAH – hence that it should be considered 1 USD = UAH 20.
Furthermore, it mentioned that the player did not address the issue of the tax
deductions.
94.
Additionally, LLC FC Metalist pointed out that – to its best knowledge – the player had
never opened a bank account in Ukraine, therefore the payment could only be made
in cash.
95.
In conclusion: “the Respondent believes that the Player’s claims under the Employment
Contract must be subject to thorough analysis, despite the Player’s allegations of their
straightforward nature. However, the Respondent is not in a position to assist with this
aspect due to the lack of access to any documentation, which belongs to the [PJSC FC
Metalist], to which the Respondent has no connection”.
C.
96.
The requests for relief
Based on the abovementioned consideration, LLC FC Metalist reiterated its requests
for relief as per its reply to the claim.
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V. CONSIDERATIONS OF THE DISPUTE RESOLUTION CHAMBER
a. Competence and admissibility
97.
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 29 July 2021 and
submitted for decision on 29 August 2022. Taking into account the wording of article
34 of the June 2022 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.
98.
Subsequently, the Chamber referred to article 2 par. 1 of the Procedural Rules and
observed that in accordance with article 23 par. 1 in combination with article 22 par. 1
lit. a) of the RSTP (July 2022 edition), the DRC is in principle competent to deal with the
matter at stake, which concerns an employment-related dispute with an international
dimension between a Portuguese player and a Ukrainian club.
99.
At this point, the Chamber noted that LLC FC Metalist challenged the admissibility of
the player’s claim and alleged that it should be deemed time-barred in line with article
25, par. 5, of the FIFA RSTP, which reads as follows:
“The relevant FIFA decision-making body shall not hear any case subject to these
regulations if more than two years have elapsed since the event giving rise to the
dispute. Application of this time limit shall be examined ex officio in each individual
case” (emphasis added).
100.
In this regard, the DRC observed that LLC FC Metalist is of the opinion that the event
giving rise to dispute at stake i.e. the date triggering the statute of limitations, is the
alleged breach of contract by PJSC FC Metalist, namely the date of the termination of
the employment contract by the player (i.e. 9 July 2015). In addition, it deems that the
time limit set out in article 25, par. 5 of the FIFA RSTP was not interrupted by the first
claim lodged by the player (cf. article 138 (1) of the SCO), hence has already elapsed.
101.
The player, on the other hand, states that the event giving rise to the dispute is not the
termination of the employment contract, rather “the reappearance of the Respondent in
the robes of [PJSC FC Metalist]”. Subsidiarily, the player argued that LLC FC Metalist was
founded on 10 October 2019, therefore the time limit to file the claim from such
scenario would be 10 October 2021.
102.
In view of this divergent positions of the parties, the Chamber outlined that while
materially identical to the provision raised by the Respondent (i.e. article 25 par. 5), in
fact the analysis of the event giving rise to the dispute should be grounded on article
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REF FPSD-3193
23 par. 3 of the FIFA RSTP edition July 2022. This is the applicable edition at the moment
the decision is rendered in accordance with article 26 of the same regulations and
article 3 of the Procedural Rules – in that this is the moment where the admissibility of
a claim and the jurisdiction of the Football Tribunal is determined. Put differently, the
jurisdiction of the Football Tribunal must be assessed on the basis of the regulations in
force and not the past ones.
103.
At the same time, the Chamber clarified that the application of article 26 of the FIFA
RSTP subsists as to the merits (substance) of a claim, as detailed in continuation. If this
was not the case, the Football Tribunal would be assessing claims on the basis of (past)
regulations that did not foresee its own existence, which is simply legally incongruous
and contrary to the FIFA RSTP in and of itself.
104.
In continuation, the Chamber established that the definition of the “event giving rise to
the dispute” is, in specific cases such as the one at hand, subject to interpretation.
Likewise, the CAS jurisprudence in cases involving sporting succession is not uniform,
as demonstrated by the fact that both parties filed awards on the same topic with
different outcomes.
105.
Accordingly, the majority of the Chamber decided to adhere to the conclusion reached
in the recent CAS 2020/A/7290 - ARIS FC v. Oriol Lozano Farrán & Fédération Internationale
de Football Association (FIFA):
“In a case involving a succession of clubs, the “event giving rise to the dispute” to be
considered when trying to determine whether or not a claim introduced by a player
against the new club is time-barred, is not the contractual violation by the old club,
but the new club’s date of affiliation to its national federation, as it is from that
specific moment in time that the player is in the position to initiate proceedings
against the new club before the FIFA Dispute Resolution Chamber (DRC). Indeed,
only as from that specific moment, when the new club starts actively participating in a
competition organised under the auspices of the national federation, is the FIFA DRC,
also in consideration of the party requirement according to the relevant applicable law,
in particular under Article 6 of the Rules Governing the Procedures of the Players’ Status
Committee and the Dispute Resolution Chamber, able to deal with the case” (emphasis
added).
106.
Furthermore and in light of the particularities of the case at hand, the majority of the
DRC also concurred with the above-mentioned CAS Award. Determining otherwise, and
in case the “event giving rise to the dispute” would be the breach of contract (i.e. in casu,
the termination of the employment contract on 9 July 2015), this would lead to the
situation that an alleged sporting successor could avoid payment obligations by waiting
two years as from the contractual termination in order for a possible claim of the
creditor to be time-barred.
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REF FPSD-3193
107.
In parallel, the majority of the Chamber also found it decisive that the player had
already lodged the First Claim before the DRC on 31 July 2015, which was subsequently
closed due to the disaffiliation of PJSC FC Metalist.
108.
On this note, the majority of the DRC concurred with the player’s position that the “event
giving rise to the dispute” is, in fact, the date of the affiliation of the alleged sporting
successor (i.e. LLC FC Metalist) to the relevant federation (i.e. the UAF).
109.
Based on the foregoing, the Chamber turned to documentation on file and acknowledged
that it remained undisputed between the parties that LLC FC Metal was established in
October 2019 and renamed as LLC FC Metalist in June 2021, therefore the player could not
have filed a claim (in any event or before any jurisdiction) against the Respondent prior to
those dates. Moreover, only as from June 2021 the LLC FC Metalist was affiliated to the UAF,
as from which date the player could objectively file a claim against it before FIFA.
110.
As a consequence, while considering that the claim sub judice was lodged by the player on
29 July 2021, the majority of the DRC decided that it is not time-barred in line with article
23, par. 3, of the FIFA RSTP, July 2022 edition.
111.
The Chamber also stressed that the above-mentioned rationale suffices to establish the
admissibility of the claim, reason why no further analysis as to the interruption of the time
limit – such as raised by the Respondent – is needed.
112.
It follows that the claim of the player is admissible.
b. Applicable legal framework
113.
Thereafter, the Chamber analysed which regulations should be applicable as to the
substance of the matter. In this respect, it confirmed that, in accordance with article 26
par. 1 and 2 of the FIFA RSTP (July 2022 edition), and considering that the present claim
was lodged on 29 July 2021, the February 2021 edition of said regulations (hereinafter:
the Regulations) is applicable to the matter at hand as to the substance.
c. Burden of proof
114.
The Chamber recalled the basic principle of burden of proof, as stipulated in article 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 article 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 TMS.
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REF FPSD-3193
d. Merits of the dispute
115.
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.
116.
Taking into consideration that the decision on the admissibility of the claim of the
player was taken by the majority of the Chamber, the following reasoning and,
consequently, the outcome of the case sub judice, is also the decision as laid down by
the majority of the members of the DRC. Therefore, any references to “the DRC” or “the
Chamber” henceforth shall be understood as referring to its majority.
A.
Main legal discussion and considerations
117.
The foregoing having been established, the Chamber moved to the substance of the
matter, and took note of the fact that the dispute at hand is connected to the
Employment Contract concluded between the player and PJSC FC Metalist on 27
February 2015.
118.
Additionally, the DRC was also mindful that the player is now pleading against LLC FC
Metalist insofar as, in his opinion, the latter is supposedly the sporting successor of the
bankrupted PJSC FC Metalist. The occurrence of sporting succession is strongly
disputed by LLC FC Metalist, who additionally objects (in a subsidiary manner) to the
player’s entitlement to the amounts claimed on the basis of: (i) the content of the
Employment Contract; (ii) the alleged lack of diligence within the insolvency
proceedings; and (iii) the potential violation of the public order of Ukraine.
119.
Against this background, the DRC considered that its task was to determine the
following:
a. Is LLC FC Metalist the sporting successor of PJSC FC Metalist?
b. If affirmative, what are the consequences that follow?
120.
The Chamber proceeded then to analyse each topic in turn.
(A.1) Is LLC FC Metalist the sporting successor of PJSC FC Metalist?
121.
As a point of departure, the DRC recalled the case law of the Football Tribunal related
to the particular issue of sporting succession as well as case ref. CAS 2016/A/4550,
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REF FPSD-3193
which mutatis mutandis can be applied to the present matter. Indeed, in said Award
(and while confirming a previous decision of the FIFA DRC), CAS established that a club
is a sporting entity identifiable by itself that, as a general rule, transcends the legal
entities which operate it. The DRC was comfortable to follow this reasoning as it reflects
the general case law in respect of sporting succession.
122.
Moreover, the Chamber referred to the already mentioned CAS Award in the matter
CAS 2013/A/3425, which - on its turn - includes the following reasoning:
“The Sole Arbitrator highlights that the decisions that had dealt with the question of the
succession of a sporting club in front of the CAS (CAS 2007/A/1355; TAS 2011/A/2614;
TAS 2011/A/2646; TAS 2012/A/2778) and in front of FIFA’s decision-making bodies (…),
have established that, on the one side, a club is a sporting entity identifiable by itself
that, as a general rule, transcends the legal entities which operate it. Thus, the
obligations acquired by any of the entities in charge of its administration in relation
with its activity must be respected; and on the other side, that the identity of a club is
constituted by elements such as its name, colours, fans, history, sporting
achievements, shield, trophies, stadium, roster of players, historic figures, etc.
that allow it to distinguish from all the other clubs. Hence, the prevalence of the
continuity and permanence in time of the sporting institution in front of the
entity that manages it has been recognised, even when dealing with the change
of management companies completely different from themselves” (original text
in Spanish, emphasis added).
123.
Such rationale is also confirmed by a significant number of CAS awards that, inter alia,
address the criteria to determine if sporting succession has taken place, regardless of
the legal form and management under which the respective clubs have operated (e.g.
CAS 2018/A/5618, CAS 2020/A/6884, CAS 2020/A/7092, and CAS 2020/A/7290).
124.
Furthermore, although not directly applicable to the matter at stake, the Chamber
noted that article 15 par. 4 of the FIFA Disciplinary Code (2019 edition) and article 24ter
par. 1 of the FIFA RSTP also enlighten FIFA’s approach regarding the recognition of a
sporting successor and constitute, to some extent, a codification of the jurisprudence
on the topic. Said provisions read as follows, for ease of reference:
Article 15, par. 4 of the FIFA Disciplinary Code:
“The sporting successor of a non-compliant party shall also be considered a noncompliant party and thus subject to the obligations under this provision. Criteria to
assess whether an entity is to be considered as the sporting successor of another entity
are, among others, its headquarters, name, legal form, team colours, players,
shareholders or stakeholders or ownership and the category of competition
concerned”.
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Article 24ter, par. 1 of the FIFA RSTP:
“The sporting successor of a debtor shall be considered the debtor and be subject to
any decision or confirmation letter issued pursuant to this article. The criteria to assess
whether an entity is the sporting successor of another entity are, among others, its
headquarters, name, legal form, team colours, players, shareholders or stakeholders
or ownership and the category of competition concerned”.
125.
On this specific topic, the Chamber also made reference to the following passage of
CAS 2020/A/7290, in verbis:
“For the sake of clarity and avoidance of any misunderstanding, the Sole Arbitrator
further recognises that the elements as referred to in Article 15 (4) of the 2019 edition
of the FDC and Article 24ter(l) of the FIFA RSTP are not exhaustive, as clearly follows
from the words "among others". The Sole Arbitrator feels forced to lay emphasis on this.
In other words, the existence of several elements in light of these provisions can
lead, in its combination, and so even if not all elements are met in a specific case,
to the conclusion that a club has to be considered as a "sporting successor". The
overall package of elements is decisive (see also CAS 2020/ A/6884). As was also
clearly stated in CAS 2020/ A/7092, on which the Appellant heavily relies, the Sole
Arbitrator considers himself not bound by prior decisions of the FIFA DC, FIFA DRC or
the CAS. In fact, because such analysis is to be made on a case-by-case basis, i.e.
elements present in a certain case may tip the balance in one direction, whereas
the elements present in a lesser or higher degree in another case, may tip the
balance in the opposite direction” (emphasis added).
126.
Therefore, the DRC highlighted that in accordance with the case law of both the
Football Tribunal and CAS, the occurrence of sporting succession shall be assessed in
a case-by-case basis, bearing in mind the existence of sports continuity / permanence
from a pragmatical point of view. Said analysis is based inter alia on non-exhaustive
and non-cumulative criteria defined by the jurisprudence (and, to some degree,
codified in the FIFA regulations).
127.
With the above in mind, the Chamber acknowledged that, in casu, LLC FC Metalist’s
challenged the player’s qualification of the Respondent as the sporting successor of
PJSC FC Metalist based essentially on: (i) the lack of abuse and/or intention to deviate
from financial obligations of the bankrupted PJSC FC Metalist i.e. its alleged good faith;
and (ii) the absence of sports continuity vis-à-vis the defining elements of each relevant
club and the paradigms set out in the jurisprudence.
128.
The DRC then moved to the analysis of each of these elements as raised by the
Respondent.
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REF FPSD-3193
(i) The lack of abuse / fraudulent conduct from LLC FC Metalist
129.
First and foremost, the Chamber established straightaway that the obligation resting
with the successor to pay the predecessor’s previous debts is not dependent on
whether the reasons triggering the bankruptcy ab initio were legitimate or suspicious,
but on the fact that a new club takes over the old club sportive distinctive traits.
Likewise, a finding of sporting succession does not have to derive necessarily from a
fraudulent conduct, nor does the counterparties have to prove the existence of “fraud”
from the sporting successor.
130.
In other words, the jurisprudence of the Football Tribunal and CAS are solid to
determine that fraudulent practices by parties trying to avoid payments do not
constitute a conditio sine qua non to conclude that sporting succession occurred.
Conversely, sporting succession can exist even if there is absence of such practices (cf.
CAS 2020/A/7290).
131.
Consequently, the DRC decided that the Respondent’s position in this regard should be
rejected. Along the same lines, the Chamber pointed out that LLC FC Metalist’s
allegations in the sense that it did not take advantage of PJSC FC Metalist’s eventual
credits and assets are not necessarily relevant to this dispute as they are not decisive
for the analysis of the sporting succession, which is based on different criteria.
(ii) The criteria for sporting continuity
132.
Having established the above, the DRC moved to the issue of the sporting continuity, a
crucial element to the issue of succession. In doing so, the Chamber turned its attention
to the documentation brought forward by the parties together with their submissions
and noted that each of them referred to specific criteria to support their respective
position as to the occurrence (or not) of the sporting succession.
133.
After a thorough analysis of the evidence on file, the DRC considered that the following
elements as pivotal for the analysis at hand:
• LLC FC Metalist uses the same colors as PJSC FC Metalist;
• LLC FC Metalist competes in the Ukrainian league under the exact same name
of PJSC FC Metalist: “FC Metalist” or “FC Metalist Kharkiv”;
• LLC FC Metalist uses the exact same logo as PJSC FC Metalist. Moreover, the
current logo of LLC FC Metalist – as included in its official website – makes clear
reference to the foundation of PJSC FC Metalist in 1925, as follows:
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• LLC FC Metalist’s official website also gives publicity to a commemorative logo
used in the 2015/16 season (i.e. when the latter was not even founded)
celebrating the 90 years of its foundation (i.e. clearly making reference to the
foundation of PJSC FC Metalist), as follows:
• LLC FC Metalist holds its matches in the same stadium as PSJC FC Metalist;
• LLC FC Metalist is registered at the same address as PSJC FC Metalist (i.e. the
cited stadium);
• LLC FC Metalist uses the same website as PSJC FC Metalist and its social media
makes reference to events and achievements occurred before its foundation,
but contemporaneous to the history and achievements of PJSC FC Metalist; and
• LLC FC Metalist and PJSC FC Metalist share common managers and
representatives. In particular, the evidence on file shows that Mr Yaroslavskyi
(i.e. previous owner of PJSC FC Metalist and current president of LLC FC Metalist),
repetitively and publicly manifested its umbilical link with the old club in order
to engage the fanbase.
134.
While considering the above, the DRC was satisfied with the conclusion that there are
sufficient elements to establish that LLC FC Metalist deliberately relied on the identity
and image of PJSC FC Metalist to be considered the same club (or, at least, to be directly
and unequivocally associated with its history). Moreover, the Chamber concurred that
LLC FC Metalist, despite linking the ownership of PJSC FC Metalist’s intellectual rights to
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the partnership involving Mr Yaroslavskyi, implicitly confirmed its association with the
PJSC FC Metalist. The reason for this is that LLC FC Metalist could not advance any valid
explanation why it would pursue such rights / assets (and assume the risks of liabilities)
instead of creating its own identity. Had LLC FC Metalist not wished to take advantage
of the past sporting merit and history of PJSC FC Metalist, it could have simply departed
from it. However, it did exactly the opposite.
135.
Furthermore, the Chamber could not agree with LLC FC Metalist’s argumentation that
the colors, address, and trademarks should not be considered as decisive factors for
the definition of the sporting succession. In this respect, the Chamber considered it
true that there are some differences and shared elements with other teams. However,
the existence of several elements in light of article 15 par. 4 of the FIFA Disciplinary
Code and article 24ter par. 1 of the FIFA RSTP can lead, in its combination, and so even
if not all elements are met in a specific case, to the conclusion that a club has to be
considered as a “sporting successor”. As a matter of fact, because such analysis is to be
made on a case-by-case basis, i.e. elements present in a certain case may tip the
balance in one direction, whereas the elements present in a lesser or higher degree in
another case, may tip the balance in the opposite direction (cf. CAS 2020/A/7092).
136.
Looking at the overall elements of the case, when analysed together, the Chamber also
found it clear from the file that such elements could reasonably induce the legitimate
expectation in the football community that LLC FC Metalist is indeed the “new” PJSC FC
Metalist. As substantiative aspects on this matter, the DRC gave particular weight to
the fact that LLC FC Metalist uses the exact same name and logo as PJSC FC Metalist,
as well as it publicizes its link with PJSC FC Metalist’s history in its social media and via
its managers and representatives. This without forgetting that LLC FC Metalist uses the
same website of PJSC FC Metalist, where there are also references to the foundation of
PJSC FC Metalist.
137.
In the Chamber’s view, another convincing evidence of the sporting succession
between the clubs appears in the fact that the UAF itself – when requested to provide
information on the sporting succession of PJSC FC Metalist – addressed the factual and
legal framework involving LLC FC Metalist (and did only mention SC Metalist and FC
Metalist 1925 en passant and on a subsidiary basis). What is more, it appears that the
“confusion” between LLC FC Metalist and PJSC FC Metalist had already been raised
before the local federation, insofar as it provided detailed explanation on the history
and the administration of the club that – despite not having been shared with the
parties – was, to a significant extent, echoed the Respondent’s reply.
138.
According not only to the publicly available information retrievable from the
Respondent’s media channels and website but also in accordance with the evidence on
file, the Chamber could not find any indication whatsoever of discontinuity with PJSC
FC Metalist. In this regard, the DRC determined that the allegation that said clubs do
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not share the same players is not significant per se as far as LLC FC Metalist was
founded almost 5 years after the disaffiliation of PJSC FC Metalist and the players were
expected to resume their careers elsewhere. In other words, sharing the same players
could not be deemed as a decisive factor in the matter at hand for it would be
incongruous to expect that players would wait several years to resume their contracts
with the “new” PJSC FC Metalist.
139.
Within this specific factual background, the arguments regarding the ownership,
license, and legal entities were also fully noted by the Chamber. Nevertheless, the DRC
was of the opinion that they are not conclusive and could not per se prevail over the
significant number of other elements that – contrario sensu to the Respondent’s
position – clearly point out in the direction of sporting succession. The Chamber also
wished to remark that, as described by the award in CAS 2020/A/7920: “whether a club
in operated through a different legal entity does not bear relevance on whether the sporting
succession has taken place i.e. ‘a sporting entity identifiable by itself that, as a general rule,
transcends the legal entities which operate it’ (CAS 2013/A/3425 at. Par. 139)”.
140.
The DRC also stressed that in spite of the myriad of evidence provided by the
Respondent in connection with the legal treatment of the assets of PJSC FC Metalist, its
transfer to the municipality and subsequent acquisition, the core of the sporting
succession is irrespective of the existence of good faith of the clubs involved (cf. CAS
2020/A/7423). Put simply, the analysis is based on the external appearance of the
sports continuity from the football community’s point of view, and not from the legal
perspective alone. Therefore, the technicalities involving the transfer of the assets,
trademarks, and intellectual properties are also not decisive on the matter at hand –
or at least are not sufficient to counterbalance the other elements analyzed and tip the
balance back in favor of the Respondent.
141.
Based on all the above-mentioned considerations, the majority of the DRC concurred
with the player’s position and decided to reject the Respondent’s arguments on the
issue of sporting succession. As such, the Chamber decided that LLC FC Metalist is the
sporting successor of PJSC FC Metalist.
(A.2) What are the consequences that follow?
142.
The sporting succession having been established, the DRC concluded that LLC FC
Metalist should then be liable to comply with PJSC FC Metalist’s pending financial
obligations towards the player.
143.
At this point, the DRC turned to the allegations of the player as to the outstanding
remuneration and breach of the Employment Contract.
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144.
Taking into consideration the complexity (and relevance) of the factual framework of
the case at hand, the Chamber drew the following timeline containing the most
relevant events to the assessment of this dispute:
Date
June 2021
Event
Signature of the Employment Contract between the player and PJSC
FC Metalist valid as from 21 February 2015 until 30 June 2016.
Notice from the player to PJSC FC Metalist requesting payment of
USD 159,142 in connection with the employment contract. The
player granted the club a 7 days’ deadline to remedy the breach (i.e.
until 8 July 2015) under penalty of termination.
Reply from PJSC FC Metalist to the player inter alia challenging the
amount claimed, requesting the player to resume his services, and
concluding that a potential termination would take place without
just cause.
Termination of the Employment Contract by the player.
First Claim against PJSC FC Metalist lodged by the player before the
FIFA DRC for outstanding remuneration and compensation for
breach of contract (i.e. total of 459,142 plus interest).
Signature by the player of a new employment agreement with SD
Ponferradina valid as from the date of signature until 30 June 2017.
Letter from FIFA to the parties in the First Claim informing that it
was not in a position to proceed with the cited matter due to the
disaffiliation of PJSC FC Metalist. Case closed.
Opening of bankruptcy procedure by the Kharkiv Region
Commercial Court against PJSC FC Metalist.
Notification by the Supreme Economic Court of Ukraine on its
website on commencement of the bankruptcy procedure against
PJSC FC Metalist.
Approval of the register of creditors' claims of PJSC FC Metalist by
Kharkiv Region Commercial Court.
PJSC FC Metalist declared bankrupted and opening of the
liquidation procedure against PJSC FC Metalist before the
Commercial Court of Kharkiv Region.
Affiliation of LLC FC Metalist to the UAF (2021/2022 season).
29 July 2021
Request from the player to FIFA to resume the First Claim.
21 February 2015
1 July 2015
8 July 2015
9 July 2015
31 July 2015
5 August 2015
19 August 2016
9 June 2017
11 June 2017
17 March 2020
22 April 2021
145.
Within this framework, the Chamber underlined that at the time of the termination of
the Employment Contract (i.e. 9 July 2015), the player claimed to be entitled to overdue
payables amounting to USD 159,142, corresponding to his salaries of February (pro
rata), April, May, and June 2015, plus the sign-on fee due on 15 May 2015, and the
accommodation allowance from March until June 2015.
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146.
In addition, the DRC noted that the player put the club in default on 1 July 2015 and
granted it a 7 days’ deadline to cure the breach. As no payment was delivered within
said time limit, the player notified the termination of their employment relationship
arguing just cause.
147.
In view of the above, the Chamber thoroughly analysed the content of the reply sent
by PJSC FC Metalist to the player on 8 July 2015 and considered that it discussed part
of the amounts claimed but failed to provide proof of payments or any clarification as
to the quantum due. Furthermore, the DRC was also mindful that LLC FC Metalist
argued that: (i) it was not in the position to make any comments on what is a res inter
alia acta; (ii) in light with the “dramatic fluctuations” and based on the wording of clause
5.1 of the Employment Contract, the amounts claimed by the player should be in UAH
converted based on the rate of 1 USD = 20 UAH; (iii) the player’s salary should be subject
to tax deductions in line with clause 5.3 of the Employment Contract; (iv) the player had
never opened a bank account in Ukraine and received his monies in cash therefore,
“the player’s claims under the employment contract could be tainted by the illegality
surrounding the financial operations of [PJSC FC Metalist] and its owner at the time”.
148.
After considering the position of the parties to this extent, the DRC concluded that
there is no sufficient evidence on file capable of justifying the lack of payment of the
original debtor (i.e. PJSC FC Metalist) of the player’s remuneration. In this context, the
Chamber found it noteworthy that:
•
in its reply dated 8 July 2015, PJSC FC Metalist disputed part of the amounts
claimed by the player but did not specify the sum that was in fact overdue.
Moreover, PJSC FC Metalist argued that the player was in breach of contract
for not availing himself to receiving the payments, being absent in trainings,
and failing to open a national bank account. However, PJSC FC Metalist failed
to provide any documentary evidence in support of its allegations, such as
default notice, proof of payment, proof of absence in training sessions or
updated calculation. Consequently, its argumentation could not be upheld;
•
in spite of not being the original debtor, as the sporting successor, LLC FC
Metalist shall be liable to the financial duties of PJSC FC Metalist (cf. CAS
2020/A/7092 and CAS 2020/A/7290). Moreover, the impossibility to retrieve
administrative documentation cannot be attributable to the player, let alone
be deemed as a valid reason to exempt the Respondent from the payment of
its (indirect) obligations;
•
in accordance with clause 5.1 of the employment contract, the remuneration
of the player was fixed in US Dollars (USD) and shall be fixed by the DRC in
the same currency. The conversion of any sum to Ukraine Hryvnia (UAH)
pertains to the execution only and shall be entertained in light with the
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aforementioned clause, provided that – at the date of the payment – the
maximum rate is 1 USD = 20 UAH, as stipulated by the parties;
•
as opposed to the LLC FC Metalist’s allegations as to the tax deductions, the
lack of calculation cannot be interpreted against the player. On the contrary,
in the absence of any evidence capable of demonstrating the taxes imposed
on the player, his remuneration shall be considered in full and paid
accordingly; and
•
LLC FC Metalist’s allegations as to the illegality of the payments in cash
allegedly delivered to the player is of speculative nature only and is not
supported by any documentary evidence. Therefore, they shall be rejected.
149.
Based on the foregoing, the DRC determined that the Respondent could not establish
to a comfortable degree of satisfaction that the player should be entitled to the
amounts claimed in his default notice. What is more, by considering that the
outstanding remuneration mentioned by the player is contractually based and
amounts to more than 4 monthly salaries, the Chamber was convinced that, as per its
solid jurisprudence, such persistent and substantial non-compliance of the contractual
obligations by a club could justify the unilateral termination of the contract as well as
it can hold it liable for breach of contract.
150.
Therefore, based on the factual and contractual situation, the DRC decided that the
player had just cause to terminate the employment relationship with PJSC FC Metalist.
Consequently, the Respondent (in the quality of sporting successor) should be liable to
pay the player his outstanding remuneration and compensation for breach of contract
(if any).
151.
Notwithstanding the above, the Chamber observed that LLC FC Metalist alternatively
argued that the player should not be entitled to any amount as he did not show the
required degree of diligence to register as a creditor in the bankruptcy proceedings of
PJSC FC Metalist. Additionally, the Respondent also claimed that the payment of any
sum on behalf of PJSC FC Metalist would amount to a violation of the public order of
Ukraine.
152.
In view of the above, the DRC moved to the analysis of the Respondent’s position as to
the due diligence of the player. In doing so, the Chamber firstly noted that LLC FC
Metalist referred to the findings of CAS 2011/A/2646 and CAS 2019/A/6461, arguing
that the situation dealt with by such awards and the present case would be analogous.
The DRC carefully examined the CAS Awards quoted by the Respondent, and
highlighted that CAS 2019/A/6461 summarizes the conclusions reached in the case law
as follows:
153.
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REF FPSD-3193
“[…] There is no doubt that a creditor is expected to be vigilant and to take prompt and
appropriate legal action in order to assert his claims. So, in principle, the Panel agrees
with the general stance taken by other CAS Panels and by the FIFA Disciplinary
Committee, that no disciplinary sanctions can be imposed on a new club as a result
of succession, should the creditor fail to claim his credit in the bankruptcy proceedings
of the former club, as there is a theoretical possibility he could have recovered his credit,
instead of remaining passive (CAS 2011/A/2426 § 20-31). To the understanding of the
Panel, in such instances it is necessary to examine whether a creditor has shown the
required diligence to recover the amounts he is owed. Yet, there is no blanket rule, and
this assessment should be made based on the specific circumstances of each particular
case”.
154.
On this note, the Chamber duly considered that, whereas the jurisprudence quoted by
LLC FC Metalist pertains to disciplinary cases where the applicability of article 15 of the
FIFA Disciplinary Code is sub judice, the case at hand solely analyses the existence of a
sporting succession and the liability of the successor (i.e. LLC FC Metalist) to the
consequences of a breach of contract by its predecessor (i.e. PJSC FC Metalist). Put
differently, the Chamber concurred that the case at hand does not have a disciplinary
nature, entailing that it does not (and could not) discuss a possible sanction on the
Respondent as a result of its failure to comply with a decision (cf. CAS 2011/A/2646 and
CAS 2019/A/6461).
155.
Consequently, DRC found that the “required diligence of the creditor” as defined in the
CAS jurisprudence and referred to by LLC FC Metalist in its reply does not apply to the
case at hand. A similar conclusion was reached in CAS 2020/A/7290, which addressed
the same topic and set forth inter alia that: “the question of whether the creditor showed
the required degree of diligence has regularly been assessed in the context of the FIFA
Disciplinary Committee related to the imposition of disciplinary sanctions for a possible
contribution to a breach of Article 64 of the FIFA Disciplinary Code (FDC) (edition 2011 or
2017) or Article 15 FDC (edition 2019). In the context of a decision of the FIFA DRC related to
the consequences of a contractual breach, the degree of diligence of the creditor does not
need to be assessed”.
156.
In addition, the Chamber also deemed that LLC FC Metalist’s argumentation as to the
potential violation of the public order of Ukraine should not succeed. In this respect,
the members of the DRC were not convinced of the causal nexus between the sanction
imposed on Mr Kurchenko and the impossibility of LLC FC Metalist to perform a
payment as the sporting successor of PJSC FC Metalist. What is more, the Chamber
further stressed that such background could not be attributable to the player as third
party in good faith.
157.
In conclusion, the Chamber ruled that the player shall be entitled to following amounts.
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Outstanding remuneration
158.
On the basis of the general legal principle of pacta sunt servanda, the DRC decided that
the Respondent should be liable to pay the player the amounts that were outstanding
at the time of the termination, as follows:
•
USD 7,142 as the pro rata salary of February 2015;
•
USD 500 as the accommodation allowance of March 2015;
•
USD 25,000 as the salary of April 2015;
•
USD 500 as the accommodation allowance of April 2015;
•
USD 25,000 as the salary of May 2015;
•
USD 500 as the accommodation allowance of May 2015;
•
USD 75,000 as the sign-on fee due until 15 May 2015;
•
USD 25,000 as the salary of June 2015; and
•
USD 500 as the accommodation allowance of June 2015.
159.
In addition, bearing in mind the player’s request to this end and – at the same time –
the specific timeline of the case and the suspension of the proceedings due to the war
in Ukraine, the DRC decided to award the player interest at the rate of 5% p.a. on the
outstanding amounts as from the date of the claim (i.e. 29 July 2021) until the date of
effective payment.
160.
Nonetheless, the Chamber observed that the player also requested FIFA to “condemn
the Respondent to pay to the Claimant the costs in which the latter has incurred with his
return flight ticket to Portugal in the approximate amount of USD 200,00 (two hundred US
Dollars)”. However, the DRC outlined that the player did not advance any proof of the
expenses effectively incurred with said flight ticket, let alone a proof of payment of the
amount requested. Consequently, the members of the Chamber decided that this
specific part of the claim should be rejected in line with article 13, par. 5 of the
Procedural Rules.
Compensation for breach of contract
161.
In addition to all the above and taking into consideration that the Employment Contract
was prematurely terminated with just cause by the player, the DRC stressed that he
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REF FPSD-3193
shall also be entitled to compensation of breach of contract in line with article 17 of the
Regulations.
162.
The Chamber then turned to the calculation of the amount of compensation payable
to the player by the club in the case at stake. In doing so, the Chamber firstly
recapitulated that, in accordance with article 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, and depending on whether the contractual breach falls within
the protected period.
163.
In application of the relevant provision, the Chamber held that it first of all had to clarify
as to whether the Employment Contract contained a provision by means of which the
parties had beforehand agreed upon an amount of compensation payable by the
contractual parties in the event of breach of contract. In this regard, the Chamber
established that no such compensation clause was included in the Employment
Contract.
164.
As a consequence, the members of the Chamber determined that the amount of
compensation payable by the club to the player had to be assessed in application of
the other parameters set out in article 17 par. 1 of the Regulations. The Chamber
recalled that said provision provides for a non-exhaustive enumeration of criteria to be
taken into consideration when calculating the amount of compensation payable.
165.
Bearing in mind the foregoing as well as the claim of the player, the Chamber
proceeded with the calculation of the monies payable to the player under the terms of
the contract from the date of its unilateral termination until its end date. Consequently,
the Chamber concluded that the amount of USD 300,000 (i.e. the residual value of the
contract comprising the salaries from July 2015 until June 2016 à USD 25,000 each)
serves as the basis for the determination of the amount of compensation for breach of
contract.
166.
In continuation, the Chamber verified as to whether the player had signed an
employment agreement with another club during the relevant period of time, by
means of which he would have been enabled to reduce his loss of income. According
to the constant practice of the DRC as well as article 17 par. 1 lit. ii) of the Regulations,
such remuneration under a new employment contract shall be taken into account in
the calculation of the amount of compensation for breach of contract in connection
with the player’s general obligation to mitigate his damages.
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REF FPSD-3193
167.
Indeed, the player found employment with SD Ponferradina. In accordance with the
pertinent employment contract, the player was entitled to EUR 140,000 for the relevant
period. Therefore, the Chamber concluded that the player mitigated his damages in the
total amount of USD 153,272 with the exchange rate of the date of signature of the
relevant contract by the player and SD Ponferradina.
168.
Subsequently, the Chamber referred to article 17 par. 1 lit. ii) of the Regulations,
according to which a player is entitled to an amount corresponding to three monthly
salaries as additional compensation should the termination of the employment contract
at stake be due to overdue payables. In the case at hand, the Chamber confirmed that
the Employment Contract termination took place due to said reason i.e. overdue
payables by PJSC FC Metalist, and therefore decided that the player shall receive
additional compensation.
169.
In this respect, the DRC decided to award the amount of additional compensation of
USD 75,000, i.e. three times the monthly remuneration of the player at the time of the
termination (USD 25,000).
170.
Consequently, on account of all of the above-mentioned, the Chamber considered that
the player would in principle be entitled to USD 221,728 as compensation for breach of
contract.
171.
Nevertheless, at this point and after a thorough analysis of the documentation on file
and, in particular, the timeline of the case, the DRC noted that:
• following the administrative letter sent by FIFA to the player on 19 August 2016
and for approximately 6 years, the player ceased to contact PJSC FC Metalist.
Equally, he never reached out to LLC FC Metal or LLC FC Metalist, therefore
failing to engage in any attempt to recover his credit;
• the player did not put the Respondent in default nor advanced any evidence
that he tried to reach out to the club before filing the claim at hand;
• despite the official communication and official news of PJSC FC Metalist’s
commencement of bankruptcy proceedings on 9 June 2017, the player kept
inert, failed to seek relief before the national courts, and limited himself to
mention that he could not have been aware of said scenario;
• LLC FC Metalist provided convincing evidence that other foreigner players
coming from the same country as the claimant registered their credits before
the Commercial Court of Kharkiv Region, therefore demonstrating that there
was indeed an alternative to be followed by the player in order to discuss and/or
retrieve his monies.
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172.
Consequently, the Chamber considered that the player lacked initiative to pursue his
credit. Put differently, while assessing the case file, the DRC was not convinced that the
player was eager to exercise his right, but instead “sat still” for circa 6 years. In doing so,
the DRC considered that the specific time lapse in the case made any discussion of the
credit and/or gathering of evidence by the Respondent inviable.
173.
Therefore, the DRC was of the opinion that the player could not benefit from his tort
either. On the contrary, it established that the overall circumstances of the case, as set
out above, should serve as mitigation factors for the calculation of the compensation
due by the Respondent to the player.
174.
On this basis and by referring to the principle of specificity of sport, the Chamber
decided that the player should be entitled to USD 110,864 as compensation for breach
of contract (i.e. 50% of the original amount).
175.
Lastly, taking into consideration the player’s request as well as the constant practice of
the Chamber in this regard, the latter decided to award the player interest on said
compensation at the rate of 5% p.a. as of the date of the claim (i.e. 29 July 2021) until
the date of effective payment.
e. Compliance with monetary decisions
176.
Finally, taking into account the applicable Regulations, the Chamber referred to article
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.
177.
In this regard, 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. The
overall maximum duration of the registration ban shall be of up to three entire and
consecutive registration periods.
178.
Therefore, bearing in mind the above, the DRC decided that the Respondent 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 player, 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 Respondent in accordance with article 24bis par. 2, 4, and 7 of the
Regulations.
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179.
The Respondent 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.
180.
The DRC 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 article 24bis
par. 8 of the Regulations.
f. Costs
181.
The Chamber referred to article 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.
182.
Likewise and for the sake of completeness, the Chamber recalled the contents of article
25 par. 8 of the Procedural Rules, and decided that no procedural compensation shall
be awarded in these proceedings.
183.
Lastly, the DRC concluded its deliberations by rejecting any other requests for relief
made by any of the parties.
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VI. Decision of the Dispute Resolution Chamber
1.
The claim of the Claimant, David Caiado Dias, is admissible and partially accepted.
2.
The Respondent, LLC FC Metalist, is the sporting successor of PJSC FC Metalist.
3.
The Respondent has to pay to the Claimant the following amounts:
- USD 159,142 as outstanding remuneration plus 5% interest p.a. as from 29 July 2021
until the date of effective payment; and
- USD 110,864 as compensation for breach of contract without just cause plus 5%
interest p.a. as from 29 July 2021 until the date of effective payment.
4.
Any further claims of the Claimant are rejected.
5.
Full payment (including all applicable interest) shall be made to the bank account
indicated in the enclosed Bank Account Registration Form.
6.
Pursuant to art. 24bis 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.
7. The consequences shall only be enforced at the request of the Claimant in accordance
with art. 24bis par. 7 and 8 and art. 24ter of the Regulations on the Status and Transfer of
Players.
8. This decision is rendered without costs.
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
www.fifa.com | legal.fifa.com | [email protected] | T: +41 (0)43 222 7777
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