Decision of the Dispute Resolution Chamber passed in Zurich, Switzerland, on 23 March 2006, in the following composition: Slim Aloulou (Tunisia), Chairman Mario Gallavotti (Italy), member Peter Friend (Australia), member Mick McGuire (England), member Gerardo Movilla (Spain), member on the claim presented by the player H, G, as Claimant/Counter-Respondent against the club O, P as Respondent/Counter-Claimant and involving the club D, S as Counter-Co-Respondent regarding a contractual dispute between the player and the club and the player s new club.
I. Facts of the case 1. The player H, Claimant, and the club O, Respondent, concluded on 20 August 2002 an employment contract valid from 20 August 2002 to 30 June 2005. 2. Clause 2 par. 2 of the aforementioned contract stipulates an option in favour of the club to irrecusably, ineludibly and unilaterally extend the duration of the contract for the two sporting seasons 2005/06 and 2006/07, exercisable until 30 June 2005 by means of a registered letter with notice of receipt sent to the player s domicile or by means of personal handing over. 3. Clause 4 par. 5 of the relevant employment contract stipulates a penalty clause according to which the player has to pay to the club the amount of EUR 2,000,000 in the following cases: - if the player terminates the contract unilaterally and without just cause, - in the case that a contract is concluded with a new club during the course of the contract, - if the aforementioned option right (note: clause 2 par. 2) is violated, - by denying the establishing of the contract agreed in the relevant extension clause (note: clause 2 par. 2) - or by not complying with the establishing of the contract without just cause, when required. 4. On 4 July 2005, the player and the club D, signed an employment contract valid for the sporting seasons 2005/06, 2006/07, 2007/08 and 2008/09. 5. On 2 August 2005, the Football Federation of the club D contacted FIFA asking for its assistance in obtaining the International Transfer Certificate (ITC) from the Football Federation of the club O for the player A. 6. In the meantime, FIFA was informed that a contractual dispute had arisen between the player and the club O, since the player was of the opinion that he was free to register with the club D. In fact, the player emphasised that the unilaterally option in favour of the club O, to extend the duration of the contract, firstly, had not been exercised by the club, because the club communicated such an intention neither by registered letter, nor by personal handing over as stipulated in the employment contract, and secondly, because the option clause itself is not valid. Thus, the player deemed to be free to enter into a new contract with another football club. A corresponding claim to determine this alleged right has been submitted by the player in front of FIFA on 3 August 2005. 7. The club O, on its part, asserts having executed the option right in time. As a consequence, the club is of the opinion that the duration of the employment contract with the player has been extended for the sporting seasons 2005/06 and 2006/07. 2
8. On 18 August 2005, the Single Judge of the Players Status Committee decided that under the given circumstances the Football Federation of the club D could be authorized to provisionally register the player A with its affiliated club D with immediate effect, pending the outcome of the contractual dispute between the player and the club O. 9. With regard to the substance of the contractual dispute, the club O presented FIFA on 24 August 2005 its position on the player s claim and lodged a counter-claim against the player A, Claimant/Counter-Respondent, and the club D, Counter-Co- Respondent. According to O, Respondent/Counter-Claimant, the above-mentioned option right to unilaterally extend the duration of the employment contract with the player was an indispensable condition for it to conclude the contract. 10. Furthermore, the club is of the opinion that it duly executed the option right. It maintains that it delivered a respective letter to the player A, contents of which were read by the player, but the player refused to sign the relevant delivery bond. In this respect, the club presented a copy of the delivery bond not signed by the player and a witness statement of the player s alleged refusing to sign the said delivery bond on 12 May 2005. Moreover, the club explains that the player had been expressly called up to go to the X Notary Office for this purpose on 19 May 2005. 11. According to the Respondent/Counter-Claimant, the option right is legal, since it was previously negotiated and agreed upon by both parties and since the salaries for the future extended contractual duration had already been established in the original contract. In this respect, the club emphasised that a salary increase had been assured to the player. 12. O further explains that the stipulated option right corresponds by all legal effects to a labour sportive promise, since it does not contain an automatically renewal, but a contractual obligation to sign another employment contract, i.e. a contract for the 2005/06 and 2006/07 sporting seasons. Furthermore, the option right is legal in the club s point of view, since the player can refuse to sign a new contract anytime, provided that he respects the agreed penalty clause (cf. above). Also, the club O explains that such option right is foreseen in the national law. According to O, the employment contract concluded with the player fulfils all the requirements of the national law: a written promise, the will and obligation to sign the definitive and pledged contract in a irrefutable and unquestionable way, the date of the beginning and the ending of the pledged contract and the indication of the remuneration. 13. Furthermore, the club O alleges that during the three passed sporting seasons the player never invocated the possible nullity of the option right. Consequently, the player recognized the option right and considered it always as valid and effective. The club further maintains that the aforementioned behaviour of the player created the belief that he would always respect that option right and would sign the 3
pledged contract. Also, the said behaviour made the club decide not to contract other players for the position of Mr. A. 14. O explained that by signing a new contract with the Counter-Co-Respondent the player acted with bad faith, in venire contra factum proprium and violated contractual obligations. As a consequence, the club O is of the opinion that the player has to pay the amount of EUR 2,000,000 agreed between the parties according to the penalty clause (cf. above). The club maintains that this compensation paid is fair and adequate considering the transfer compensation for the player of EUR 344,172, the amount payable to the player for a further transfer (the parties agreed on the participation of the player to 15 % of any future compensation paid to O), the salaries paid and to be paid to the player during 5 sporting seasons (EUR 513,764) and the international nature of the transfer. 15. Finally, the club O maintains that the club D is co-responsible for the payment of the aforementioned compensation, because it induced the player to the non-compliance of his contract. 16. In reply hereto, the player A adheres to his position and denies all allegations made by the club O. He insists that the employment contract with O expired on 30 June 2005 and that he, therefore, was free to sign with D. He further reiterates that the illegal option right had not been executed by the club. In this respect, he denies the veracity of the witness statement, since it was drafted by employees of O. The player ascertains that he never received any kind of letter regarding the extension of the contract. Consequently, he could not have refused to sign such letter. The player rejects the club s allegation by asking: Why did the club not notify the execution of the said option right by registered mail or a notary, at least after the alleged unsuccessful personal handing over of the alleged letter? 17. Furthermore, the Claimant/Counter-Respondent explains that the option right is null and void because it does not correspond to a contractual promise, but to a clause, which obliges the player to extend his employment relation for two sporting seasons, whether he likes it or not. The fact that the employer decides only and exclusively on the extension of the contractual duration is - according to the player - unacceptable. The player further insists that the overall excessive penalty clause of EUR 2,000,000 definitively violates the principle of contractual freedom, and such a clause would be, therefore, nulla ab initio without the possibility of validation. 18. The club D, Counter-Co-Respondent, denies all the allegations made by the club O and rejects the claim. The club D ascertains that it did not induce the player to a breach of contract, since at the time of signing the contract with the player, there was no contractual link between the club O and the player any longer as the relevant contract expired on 30 June 2005. Furthermore, the club D shares the opinion of the player, according to which the stipulated option right is null and void. 4
19. In reply hereto, the club O insists that it executed the option right, because it delivered the letter to the player A personally, by means of which it formally exercised the aforementioned option right on 12 May 2005. In this respect, the club enumerates four witnesses, who can allegedly testify the aforementioned allegation. The club further insists that the option right was freely negotiated, i.e. not imposed on the player, and for its inclusion into the contract the player has received the amounts and benefits fixed in the contract. Finally, the club explains that any juridical promise is, by nature, irrefutable and unquestionable by one or both parties. 20. With regard to the alleged inducement of D to a breach of contract, the club O states that the co-responsibility does not depend only on the practice of any illicit fact, but results and is presumed following the mere fact of signing a contract with a player still under contract with another club, in case the player has the obligation to pay compensation to his previous club. 21. In reply hereto, the player and the club D adhere to their previously submitted positions. II. Considerations of the Dispute Resolution Chamber 1. First of all, the Chamber analysed whether it was competent to deal with the matter at stake. In this respect, it referred to art. 18 par. 2 and 3 of the Rules Governing the Procedures of the Players Status Committee and the Dispute Resolution Chamber. The present matter was submitted to FIFA on 3 August 2005, as a consequence the Chamber concluded that the revised Rules Governing Procedures (edition 2005) on matters pending before the decision making bodies of FIFA are applicable to the matter at hand. 2. With regard to the competence of the Chamber, art. 3 par. 1 of the abovementioned Rules states that the Dispute Resolution Chamber shall examine its jurisdiction in the light of articles 22 to 24 of the current version of the Regulations for the Status and Transfer of Players (edition 2005). In accordance with art. 24 par. 1 in connection with art. 22 (b) of the aforementioned Regulations, the Dispute Resolution Chamber shall adjudicate on employment-related disputes between a club and a player that have an international dimension. 3. As a consequence, the Dispute Resolution Chamber is the competent body to decide on the present litigation involving a club from the country P and a player from the country G and a club from the country S regarding a dispute in connection with an employment contract. 5
4. Subsequently, the members of the Chamber analyzed which edition of the Regulations for the Status and Transfer of Players should be applicable as to the substance of the matter. In this respect, the Chamber referred, on the one hand, to art. 26 par. 1 and 2 of the Regulations for the Status and Transfer of Players (edition 2005) and, on the other hand, to the fact that the relevant contract at the basis of the present dispute was signed on 20 August 2002 and the claim was lodged at FIFA on 3 August 2005. In view of the aforementioned, the Chamber concluded that the current FIFA Regulations for the Status and Transfer of Players (edition 2005, hereafter: the Regulations) are applicable on the case at hand as to the substance. 5. In continuation, and entering into the substance of the matter, the members of the Chamber acknowledged the above-mentioned facts as well as all the further documentation contained in the file. 6. To that regard, the members acknowledged that the player A and the club O signed an employment contract on 20 August 2002 for the pre-determined period of time from 20 August 2002 to 30 June 2005 with an option in favour of the club to unilaterally extend the contract for the two sporting seasons 2005/06 and 2006/07, exercisable until 30 June 2005 by means of a registered letter with notice of receipt sent to the player s domicile or by means of personal handing over. 7. In this respect, the members took due note that the player demands for the clause regarding the unilateral option to be declared invalid. Furthermore, he requests that it shall be established that he is not bound to the club O any longer and was free to sign with the club D, since, firstly, the option right had not been exercised in accordance with the condition stipulated in the relevant employment contract and, secondly, the exercise of the said option right itself cannot be accepted. 8. On the other hand, the members acknowledged that the club is in particular convinced of having validly exercised its right to extend the duration of the contract for another two sporting seasons and hence is of the opinion that the player is still bound by the employment contract he signed with it on 20 August 2002, until the end of the sporting season 2006/2007. Furthermore, the club is of the firm opinion that the option right is legal, since it was previously negotiated and agreed upon by both parties, since the increasing salaries for the future extended contractual duration had already been established in the original contract, since the stipulated option right corresponds to a labour sportive promise, since the player never invocated the possible nullity of the said option right and since the player can refuse to sign a new contract anytime, provided that he respects the agreed penalty clause. 9. In consideration of these positions, the members started their deliberations by verifying whether the relevant clause in the employment contract, which awards the club the possibility to unilaterally renew the employment contract is valid or not. 6
10. In this respect, the Chamber firstly took note, in particular, that the player did not sign any document different from the original employment contract according to which he acknowledges and agrees explicitly with the unilateral extension of the employment contract for the sporting seasons 2005/06 and 2006/07. 11. Furthermore, and with regard to the stipulated option right in clause 2 par. 2 of the relevant employment contract, the Chamber recalled that, in accordance with its established jurisprudence, a clause which gives one party the right to unilaterally cancel or lengthen the contract, without providing the counter-party with same rights, is a clause with disputable validity. 12. In the case at hand, the extension option contained in the relevant employment contract is unilateral to the benefit of the club only, i.e. the stronger party in the employment relationship, and may be exercised by the club during the considerable period of two football seasons. This gives the club unequal bargaining power whereas there is no apparent gain for the player, even though the conditions of the employment indeed have been increased. 13. To that specific aspect, the members noted that at the time the parties signed the employment contract, they already stipulated the wages the player would receive throughout the validity of the contract, including the period of time covered by the contract only in case the contract would be unilaterally extended by the club. In this respect, the members acknowledged particularly that the increase of the monthly stipulated salary during the said period of time in case the contract would be extended, is lower than EUR 1,000, which confirms definitively that the abovementioned extension option does not establish any significant gain for the player. 14. To that regard in this specific case, the members of the Chamber emphasised that although the financial terms had been specified in advance, they necessarily cannot take into account, neither by the player nor the club, the possible enhancement of the player s value, and hence earning power, over a two year period, in particular if he could propel his football career during that time by an international transfer to the club D. 15. Furthermore, the members pointed out that two years are a significant portion of a footballer s active career. 16. In continuation, the Chamber emphasised that the unilateral option in the contract in question curtails the freedom of movement in an excessive way and leaves the player at an unfair disadvantage. 7
17. Subsequently, the Chamber rejected all the remaining allegations of the Respondent after having them analysed carefully, since they do not constitute a reason, in order to possibly affirm the validity of the multi-named option clause. 18. Taking into consideration all of the above, the members of the Chamber concluded that the unilateral option in favour of the club in the employment contract at the basis of the present litigation cannot be considered as being legally binding on the player A. 19. Notwithstanding the above, and for the sake of completeness, the Chamber emphasized that even if it would have admitted the present option clause, the said clause would not have been legally binding on the player, since the Respondent was not able to provide FIFA with the sufficient evidences, i.e. the necessary discharge of having duly executed the said clause. 20. In addition, the Chamber stated that the clarification, as to whether the present penal clause is valid or not, can remain unanswered following the aforementioned considerations. 21. On account of the foregoing, the members of the Chamber decided that the contract signed between the parties on 20 August 2002 has come to an end on 30 June 2005. 22. As a result, the Dispute Resolution Chamber decided that the player A is not contractually bound to O any longer and therefore, he was free to sign with the club D. Consequently, the members fully accepted the player s claim and rejected the counter-claim of the club P. III. Decision of the Dispute Resolution Chamber 1. The claim submitted by the Claimant/Counter-Respondent, Mr A, is fully accepted. 2. The contract concluded between the Claimant/Counter-Respondent and the Respondent/Counter-Claimant, on 20 August 2002, expired on 30 June 2005. 3. The counterclaim submitted by the Respondent/Counter-Claimant, club O, is rejected. 4. According to art. 60 par. 1 of the FIFA Statutes, this decision may be appealed against before the Court of Arbitration for Sport (CAS). The statement of appeal 8
must be sent to the CAS directly within 21 days of receipt of notification of this decision and shall contain all the elements in accordance with point 2 of the directives issued by the CAS, a copy of which we enclose hereto. Within another 10 days following the expiry of the time limit for filing the statement of appeal, the appellant shall file a brief stating the facts and legal arguments giving rise to the appeal with the CAS (cf. point 4 of the directives). The full address and contact numbers of the CAS are the following: Avenue de Beaumont 2 1012 Lausanne Switzerland Tel: +41 21 613 50 00 Fax: +41 21 613 50 01 e-mail: info@tas-cas.org www.tas-cas.org For the Dispute Resolution Chamber: Urs Linsi General Secretary Enclosed: CAS directives 9