Founding and Landmark Cases in the FIFA DRC

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1 Founding and Landmark Cases in the FIFA DRC GIANPAOLO MONTENERI FIFPRO SPORTS LAW CONGRESS AMSTERDAM, DECEMBER 2015

2 Establishment of the FIFA Dispute Resolution Chamber 2

3 Historical Background Bosman ruling on 15 December 1995 Rules on international transfers of players challenged under various aspects in front of the European Commission Statement of objections issued by the European Commission on 14 December 1998 Intensive discussions held at political and legal level between FIFA/UEFA and the European Commission In March 2001: Agreement found between FIFA/UEFA and the European Commission on the Principles of the future transfer rules At the end of August 2001: FIFA and FIFPro reached an agreement about FIFPro s participation in the implementation of the new RSTP 3

4 Historical Background Principles of March 2001: the dispute resolution system Right of any player or club to seek redress before a civil court Within FIFA: dispute resolution system which shall consist of: Conciliation facilities offered by FIFA; if no solution is found: Dispute Resolution Chamber, with members chosen in equal numbers by players and clubs and with an independent chairman Football Arbitration Tribunal (never created) 4

5 Historical Background RSTP 2001 Formal creation of the Dispute Resolution Chamber First meeting on 22 November 2002 with two cases In 2003: four meetings; 49 decisions In 2010: 13 meetings; 350 decisions Nowadays at least one meeting per month; decisions p.a. Recognition by FIFA of the Court of Arbitration for Sport (CAS) since 11 November 2002 Amount new cases before the CAS in: 2002: : : 470 (expected) 5

6 Nature and Activity DRC is a unique institution for an international sports organisation Equal representation of players and clubs 24 members (12 club and 12 player representatives) Independent chairman and deputy chairman Rotation principle The chairman and the deputy chairman are required to be lawyers Not all the members of DRC have legal education Common for ordinary labour courts, at least in Switzerland Knowledge of the Regulations and experience in transfers and contractual relationship club/player is fundamental 6

7 Nature and Activity CAS 2004/A/678 Apollon Kalamarias FC v/ FIFA & Oliveira Morais, 12.8: ( ) the DRC s decision ought to stand, it was handed down by a multinational Panel of broad international experience who would enjoy a collective wisdom and appreciation of where the acceptable limits on restrain of trade lay. Applying general principles of law rather than specific provisions of contractual and civil law 15%-20% of DRC decision appealed to CAS; only few appeals accepted and mainly just on minor points 7

8 Reasons for the recognition of the DRC Disputes judged by experts Fair and efficient proceedings Establish a constant jurisprudence Cost-related factor Time factor Appeals to the CAS Efficient enforcement system via FIFA Disciplinary Committee Broad acceptance and credibility within the football community 8

9 LANDMARK DECISIONS AND PRINCIPLES 9

10 Oliveira Morais / Apollon Kalamarias FC DRC Decision of 22 July 2004 DRC: Unilateral options in employment contracts are invalid Inequality of bargaining power between club and players The option is unilateral; the advantages are all on the side of the club Financial terms do not account the enhancement of the player s value Short deadline of notification to the Player (5 days) of the intent to exercise the option Violation of general principles of labour law DRC decision was confirmed by the CAS 10

11 Christian Maicon Henning / Prudentopolis Esporte Clube DRC Decision of 26 November 2004 DRC: reduction of a clearly disproportionate penalty clause in the employment contract, taking into account the particularities of the case Contractual penalty clause: BRL 13,000,000 (USD 5,400,000) Monthly salary of the player: BRL 10,000 Penalty clause is more than 108 yearly salary of the player DRC reduced it to USD 300,000 (fixed ex aequo et bono) Art SCO: the judge shall reduce penalties that he deems excessive. Mandatory nature of this provision DRC decision was confirmed by the CAS 11

12 Kris Boyd / Eskişehirspor DRC Decision of 26 April 2012 The player had just cause to terminate the employment contract for unpaid salaries The employment contract provided for the remaining value of the contract as compensation in case of termination with just cause DRC: no mitigation obligation, i.e. any remuneration under the new employment contract is irrelevant Art. 337c SCO: the employee is entitled to compensation of what he would have earned until the end of the employment relationship, reduced by what he earned from other work or he intentionally failed to earn DRC Decision was confirmed by the CAS 12

13 Zurab Khizinashvili / FC Kayserispor DRC Decision of 20 August 2014 A fine of EUR 133,320 for missing just two training sessions is manifestly excessive and disproportionate and cannot be upheld Imposition of a fine, or other financial sanction, shall not be used by clubs as a means to set off outstanding financial obligations towards players Poor or unsatisfactory performance is not a valid reason to reduce a player s salary or fine a player. Poor performance is purely unilateral and subjective evaluation by the club DRC Decision was confirmed by the CAS 13

14 Mario Melchiot / SC Umm Salal DRC Decision of 28 June 2013 The club terminated the employment contract with the player due to: heart failure the player s failure to inform the club of his medical condition the player s permanent incapacity to play The DRC Conclusions: Art RSTP: The validity of a contract may not be made subject to a successful medical examination and/or the grant of a work permit. The club shall make all medical examination before entering into an employment contract with the player; due diligence 14

15 Mario Melchiot / SC Umm Salal DRC Decision of 28 June 2013 The DRC Conclusions (continued): Injury or health condition (including permanent incapacity) is not a valid reason to stop the payment to the player, suspend and/or to terminate the employment contract Same principles confirmed in the case: Sergio Sebastián Ariosa Moreira / Club Olimpia, DRC Decision of 16 December 2014 The club shall secure the continuation of the payment of the remuneration, possibly by means of adequate insurances Partial reduction of the compensation due to the permanent incapacity to play (bilateral character of an employment contract; the player is no longer in a position to render his services to the club) DRC Decision was confirmed by the CAS 15

16 Thank you for your attention! Gianpaolo Monteneri 16