Editor's Note: Frans M. de Weger is legal counsel
for the Federation of Dutch Professional Football Clubs (FBO) and CAS
arbitrator. De Weger is author of the book “The
Jurisprudence of the FIFA Dispute Resolution Chamber”, 2nd
edition, published by T.M.C. Asser Press in 2016. Frank John
Vrolijk specialises in Sports, Labour and Company Law and is a former legal
trainee of FBO and DRC Database.
In this first blog, we will try to answer some questions raised in
relation to the Article 12bis procedure on overdue payables based on the
jurisprudence of the DRC and the PSC during the last two years: from 1 April
2015 until 1 April 2017.
[1] The awards of the Court of
Arbitration for Sport (hereinafter: “the CAS”) in relation to Article 12bis
that are published on CAS’s website will also be brought to the reader’s
attention. In the second blog, we will focus specifically on the sanctions applied
by FIFA under Article 12bis. In addition, explanatory guidelines will be
offered covering the sanctions imposed during the period surveyed. A more
extensive version of both blogs is pending for publication with the
International Sports Law Journal (ISLJ). If necessary, and for a more detailed
and extensive analysis at certain points, we will make reference to this more
extensive article in the ISLJ.
In 2015, FIFA announced a very significant addition to the Regulations
on the Status and Transfer of
Players (hereinafter: “the RSTP”): the inclusion of a new
provision on overdue payables by defaulting clubs towards players and other clubs.
On 1 April 2015, the 2015 edition of the RSTP gave birth to a fast-track
procedure to deal with overdue payables enshrined in Article 12bis
(hereinafter: “the 12bis procedure”). In its Circular letter no.
1468, FIFA also strongly urged all of its member associations
to make sure that their affiliated clubs were informed of this new provision
immediately.
From Article 12bis,
which is also laid down in the 2016 edition of the RSTP, it follows that clubs
are required to comply with their financial obligations towards players and
other clubs as per the terms stipulated in the contracts signed with their
professional players and in the transfer agreements signed with other clubs. In
accordance with Article 12bis FIFA is entitled to sanction clubs that have
delayed a due payment for more than 30 days without a prima facie contractual
basis.
It was a real thorn
in the side of FIFA that too many clubs, on a worldwide level, did not comply
with their financial contractual obligations without legitimate reasons.[2] With the introduction of
this provision, it was not only FIFA’s aim to continue its process to further
speed up its proceedings, but also to establish a stronger system regarding
overdue payables towards players and clubs. FIFA stressed that it
wanted to further improve efficiency and provide
clear regulatory steps to deal with overdue payables from clubs to players and
from clubs to other clubs.
As from 1 April
2015, the Dispute Resolution Chamber (hereinafter: “the DRC”) and the Players’
Status Committee (hereinafter: “the PSC”) are FIFA’s competent authorities to
deal with claims on overdue payables in relation to Article 12bis. Both FIFA committees
were given a wide scope of discretion to impose sanctions on defaulting clubs,
such as fines and transfer bans. In fact, the possibility to impose sanctions is
critical to support a stronger and more efficient dispute resolution system regarding
overdue payables, as we will see in the second blog.
The introduction of
FIFA’s 12bis procedure also gave rise to many (legal) questions. For example, are
only clubs and players entitled to lodge a claim before respectively the PSC
and the DRC? Or are other parties, such as coaches and national associations, also
entitled to raise their claims under 12bis? Do claims for training compensation
and solidarity contribution fall under 12bis? Can the 12bis procedures be
considered as a real fast-track procedure? Under what circumstances can an
offence be considered a repeated offence? And also, since the imposition of
sanctions is key to the efficacy of the 12bis procedure, under what conditions
will these sanctions be imposed? These are only a small sample of the questions
that arose after the introduction of the 12bis procedure. In this first blog, we
will try to answer the most important questions raised based on the
jurisprudence of the DRC, PSC and CAS.
General preliminary observations
As a starting point, it
must be noted that exactly 137 decisions by the DRC and the PSC regarding
Article 12bis have been published by FIFA on its website between 1 April 2015
and 1 April 2017.[3]
Of these 137 decisions, 99 decisions have been dealt with by the DRC, including
58 decisions issued by the DRC Single Judge. Additionally, 32 decisions were
passed by a Chamber of three judges, whereas 24 of these decisions were passed
by circulars and eight were passed by a decision of a sitting Chamber in
Zürich, Switzerland. Only nine FIFA decisions were passed by a Chamber of five
judges.
From the 38 decisions of
the PSC, 37 were issued by its Single Judge and only one[4] was issued by a Chamber of
three judges via a circular. It can be noticed that in most “renouncement of
right cases” (in which defaulting clubs have not replied to the claim of the
claimant party), a Single Judge has dealt with the case.
Analysing the decisions,
it is striking that all claimants in the 137 decisions won their cases. In
other words, in none of the decisions of the DRC and the PSC it was found that
a “prima facie contractual basis”
existed for the respondent party, which would justify non-compliance with the
original contract. A sanction was imposed in all decisions.
It can further be
observed that in the great majority of the decisions, the respondent party did
not reply to the claim. As we will see, the absence of a reply will generally
result in more severe 12bis sanctions for the defaulting club.
The jurisprudence of FIFA
also illustrates that the 12bis procedure are a step towards swifter
proceedings. In the last
years we have already noted a positive development with regard to the length of
‘regular’ proceedings before FIFA (not including the 12bis procedures). With
regard to the 12bis procedure, FIFA stressed that it
has shortened the timeframe for decisions taken on overdue payables, with
decisions now being taken within eight weeks and claimants being notified of a
decision within nine weeks of lodging their complete claim. After analysing the 12bis
decisions of the DRC and the PSC, it is clear that FIFA actually lived up to
these expectations. The average duration of a 12bis procedure is two months. It
is only exceptionally that a 12bis decision lasted longer (four or ultimately
five months) or even took less time (one or one and a half months).[5] As illustrated in Figure
1, approximately 67% of the PSC and the DRC procedures were concluded within
eight weeks. Approximately 80% of both FIFA decisions were dealt with within 10
weeks.
Figure 1
The scope of Article 12bis
The two years of
jurisprudence show that the personal scope of Article 12bis must be interpreted
strictly. As follows from the text of Article 12bis(3), only players and clubs
are entitled to lodge a claim before FIFA. Put another way, coaches, national
associations and intermediaries do not have standing to sue in the 12bis
procedure. This textual interpretation of the provision is confirmed by the
jurisprudence of the DRC and the PSC. In fact, none of the reviewed decisions of
the DRC or the PSC involved a party who was not
a club or a player.
Additionally, it can be
concluded that claims for training compensation or related to solidarity
mechanism are also excluded from the scope of Article 12bis, as this opportunity
is not provided in the provision. Moreover, the current jurisprudence does not
leave room for any other interpretation. With regard to training compensation
and solidarity mechanism, this means that FIFA gives to “overdue payables” a
different meaning than the UEFA Club Licensing and Financial Fair Play
Regulations, since outstanding amounts for training compensation and solidarity
mechanism are considered by UEFA as overdue payables. The same is true for outstanding
payments due by clubs to other (than player) club employees and debts by clubs to
social/tax authorities; such outstanding amounts will not be considered by FIFA
as ‘overdue’ under Article 12bis.
Generally, the DRC deals
mainly with contracts signed by clubs with professional players. These include
employment contracts but it is to be expected that separate agreements could also
fall under the scope of Article 12bis as long as specific
elements of that separate agreement suggest that it was in fact meant to be
part of the actual employment relationship, as the DRC decided in many other
cases (not being 12bis procedures). This is for example the DRC’s position with
regard to image right contracts.[6] Based
on the jurisprudence reviewed, it follows that termination agreements fall
under the scope of Article 12bis.[7] The PSC will only deal
with transfer agreements, including both transfers on a definite[8] as well as on a temporary
basis[9]. It is to be expected that
agreements between clubs that do not concern the status of players, their
eligibility to participate in organised football, and their transfer between
clubs belonging to different associations, will most likely not fall under
Article 12bis.[10]
Finally, it also follows
from Article 12bis(3) that the creditor (player or club) must have put the
debtor club in default in writing, granting a deadline of at least 10 days to comply
with its financial obligations. Regarding this 10-days deadline, FIFA follows a
strict interpretation, as we will see in the following paragraph.
The existence of an ‘overdue payable’
As follows from the
wording of Article 12bis and the corresponding jurisprudence, two prerequisites
must be met to establish that an overdue payable exists under Article 12bis. First,
the club must have delayed a due payment for more than 30 days without a “prima facie contractual basis”. Second,
the creditor (which is the player or club) must have put the debtor club in
default in writing, granting a deadline of at least 10 days to comply with its
financial obligations. In all the published decisions the FIFA committees verified
that a 10-days deadline had been granted. We can therefore assume that this 10-days
deadline is a prerequisite for the DRC and the PSC to proceed with the claim. Although
Article 12bis is not entirely clear as regards the start of the “10-days
deadline”, the jurisprudence shows that it runs as soon as the 30 days have
elapsed.[11]
Disputes can arise with
regard to the fulfilment of the “10-days deadline”. For example, in the CAS award
of 9 May 2016, the player had filed a statement of claim before the DRC on 25
March 2015 and then sent a letter to the club on 30 March 2015 (i.e. five days after filing a claim at
the DRC) putting the club in default for the overdue payment. The club however
argued that this was a violation of Article 12bis(3) of the RSTP, edition 2015,
as it did not make any legal sense whatsoever to address a default notice to a
party after lodging a claim at FIFA. The
CAS however stated that it was clear that the player had already given the club
ample opportunity (the player stated that it had already provided three
separate notices of default) to fulfil its obligations in conformity with
Article 12bis.[12]
The CAS therefore found it curious that the FIFA administration still requested
the player to issue yet another default notice in such a situation when it was
clear that the player had already given the club many opportunities to fulfil
its obligations. This part of the award is interesting. On the one hand it
shows that (the) FIFA (administration) obliges creditors to send a “10-days
deadline” default letter under all
circumstances, while on the other hand it is to be expected that the CAS
might show more flexibility. Interestingly, in a case before the PSC, the
claimant club put the respondent club in default of payment, starting the 10-days
deadline on the exact same date of the submission. This practice was accepted
by the PSC.[13]
In other words, in order to gain time, claimants might be able to lodge a claim
in front of FIFA before the “10-days deadline” of Article 12bis has passed.
To establish whether
“overdue payables” exist, it is decisive that the “overdue payables” existed after
1 April 2015 (the date on which Article 12bis came into force). This is also
confirmed by the CAS. In its CAS award
of 17 June 2016, the Italian club Pescara referred to the fact that the
agreement between Pescara and the Belgian club Standard Liège was entered into
on 10 July 2012, while Article 12bis did not take effect until 1 April 2015.
Pescara stated that it had no means to know that Article 12bis would be enacted
nearly three years later. The Sole Arbitrator however found it decisive and
stressed that the claim made by Standard Liège was made after 1 April 2015 and
that Standard Liège referred clearly to the overdue payables from Pescara. At
the end, all that matters, according to the CAS, was the existence of overdue
payables at the assessment date and that the assessment date was after 1 April
2015.[14]
For the sake of clarity,
the fact that the DRC and the PSC have decided in 12bis procedures that a
defaulting club must pay to the claimant overdue payables does not touch upon
the question whether the contract has been terminated with just cause. To put it
bluntly, a decision in a 12bis procedure does not justify a unilateral
termination based on Article 14 of the RSTP; no legal connection exists in this
regard. The jurisprudence of the DRC in relation to its ‘regular’ proceedings
(not being 12bis procedures) generally shows that a valid ground for unilateral
termination exists only in case there is outstanding remuneration for a period
of three (or sometimes two) months.[15] This means the existence
of an overdue payable under Article 12bis does not automatically give the claimant
the legal right to unilaterally terminate the contract with the defaulting
club. It should also be noted in this regard that it follows from Article 12bis(9)
that the terms of Article 12bis are without prejudice to the application
of further measures derived from Article 17 RSTP in case of a unilateral
termination of the contractual relationship.
In the second blog we will focus
specifically on the sanctions available to FIFA under Article 12bis and will
provide explanatory guidelines covering the sanctions imposed during the period
surveyed.
[10]
Art. 1(1) RSTP, edition 2016.
[11]
Moreover, parties should be aware that the 30 days deadline will start to run
only after the so-called “grace periods” has passed, which also explicitly
follows from the applicable jurisprudence of FIFA. A grace period can be
considered as the period immediately after the deadline for an obligation
during which the amount due, or other action that would have been taken as a
result of failing to meet the deadline, is waived provided that the obligation
is satisfied during the grace period. See DRC 14 November 2016, no.
11161545-E. Also in “regular” DRC cases so-called “grace periods” are accepted.
See inter alia DRC 6 November 2014,
no. 11141064.
[12] See
CAS 2015/A/4153 Al-Gharafa
SC v. Nicolas Fedor & FIFA, award of 9 May 2016. From this award it
follows that FIFA applied the incorrect version of the RSTP in its decision of
22 June 2015 as a result of which Art. 12bis was not applicable.
[13]
PSC 30 November 2015, no. 10151052.
[14] Also
in its award of 17 June 2016, another Sole Arbitrator stressed that as Art.
12bis has been implemented within the 2015 edition of the RSTP, FIFA has the
power to impose a sanction listed in Art. 12bis(4) RSTP in that specific case. See
CAS 2015/A/4310 Al Hilal
Saudi Club v. Abdou Kader Mangane, award of 17 June 2016.
[15]
See inter alia DRC 7 September 2011,
no. 9111901 (two months) and DRC 11 May 2011, no. 129795 (three months). See
also DRC 17 December 2015, no. 12151368. Please note that CAS will hold on to a
period of three months in order to establish that a just cause exists; See inter alia CAS 2015/A/4158 Qingdao
Zhongneng Football Club v. Blaz Sliskovic, award of 28 April 2016.