Al Gharafa S.C. v. FC Steaua Bucuresti, Fédération Internationale de Football Association (FIFA)

II. FACTUAL BACKGROUND — A. Background Facts

4. Below is a summary of the relevant facts and allegations based on the parties’ written submissions. Additional facts and allegations found in the parties’ written submissions and evidence may be set out, where relevant, in connection with the legal discussion that follows. While the Sole Arbitrator has considered all the facts, allegations, legal arguments and evidence submitted by the parties in the present proceedings, it refers in his Award only to the submissions and evidence he considers necessary to explain his reasoning.

5. On 18 February 2015, the Appellant and the First Respondent entered into a transfer agreement (the “Agreement”) for the transfer of the player C. (the “Player”) from the Appellant to the First Respondent.

6. The Agreement contained, inter alia, the following provisions:

“2. Transfer Fee

2.1. GHARAFA shall pay to STEAUA the total amount of EUR 2,300,000 (two million three hundred thousand Euros) due as compensation for the early termination of the Player Contract and in consideration of the permanent transfer of the PLAYER.

2.2. The abovementioned payment will be made by international transfer of funds by GHARAFA to STEAUA as follows:

(i) EUR 1,200,000 (one million two hundred thousand Euros) due within 5 (five) natural days after the issuance of the PLAYER’s International Transfer Certificate.

(ii) EUR 1,100,000 (one million one hundred thousand Euros) due on 1 June 2015. In case of non-payment, penalties of 5% per annum shall be due.

2.3. The aforementioned transfer compensation shall be paid to the following bank account of STEAUA:

(…)

STEAUA will provide to GHARAFA, as well, the entitled invoice.

3. Notices

3.1. Any and all notifications or notices in respect of the present Agreement shall be made in writing and may be delivered personally, transmitted by facsimile, sent by e-mail, or by post to the official address of the parties or to the football associations with which they are affiliated (i.e. QFA and FRF).

(…)

5. Attorney’s Fees and Costs

5.1. In the event of disputes and/or controversy relating to this Agreement, each party shall accomplish and be responsible for its own costs, including attorney’s fees, incurred which relate to any such or controversy, including costs arising out of mediation, arbitration, litigation, or any other alternative dispute resolution”.

7. On 24 February 2015, the First Respondent sent an email to the email address “qnnp@live.com”, reportedly belonging to Mr. Fahd Al Yahri, who is the General Manager of the Appellant, stating: “Dear Sir, please find attached the invoice for the transfer of the player C. Best regards, Simona Niculescu-Mizil”. The email contained as an attachment an invoice for the amount of EUR 2,300,000 corresponding to the transfer compensation in accordance with the terms of the Agreement.

8. On 19 March 2015, the First Respondent sent a default letter to the same email address “qnnp@live.com” requesting payment of the outstanding amount of EUR 1,200,000 corresponding to the first instalment of the transfer compensation agreed by the parties to the Agreement, within 5 days from receipt of said letter.

B. Proceedings before the FIFA Players’ Status Committee

9. On 27 April 2015, the First Respondent lodged a claim with the Players’ Status Committee of FIFA (the “FIFA PSC”) against the First Respondent, requesting payment of EUR 1,200,000 corresponding to the first instalment of the transfer compensation agreed between the parties.

10. On 3 June 2015, the First Respondent sent a second default letter to the Appellant by facsimile requesting payment of the aforementioned amount of EUR 1,200,000 within 10 days.

11. On 18 June 2015, the First Respondent submitted a revised claim before the FIFA Players’ Status Committee requesting that the Appellant be ordered to pay the total outstanding amount of EUR 2,300,000 in accordance with the Agreement, plus interest at a yearly rate of 5% and that a fine and a ban from registering new players be imposed on the Appellant.

12. By way of its response dated 2 July 2015, the Appellant rejected the First Respondent’s claim arguing that it received no default notice in accordance with the provisions of Article 12bis of the FIFA Regulations on Status and Transfer of Players and section 3 of the Agreement.

13. The First Respondent further sent to the Appellant several default notices by facsimile for the total outstanding amount of EUR 2,300,000 on 1 July 2015, on 9 and on 18 September 2015.

14. On 16 July 2015, the FIFA PSC rendered its decision (the “Appealed Decision”), by which it upheld the First Respondent’s claim of 27 April 2015. The operative part of the Appealed Decision reads as follows:

“1. The claim of the Claimant, FC Steaua Bucuresti, is accepted.

2. The Respondent, Al-Gharafa SC, has to pay to the Claimant, within 30 days as from the date of notification of this decision, overdue payables in the amount of EUR 1,200,000.

3. If the aforementioned total amount is not paid within the aforementioned deadline, an interest rate of 5% per year will apply as of expiry of the fixed time limit and the present matter shall be submitted, upon request, to FIFA’s Disciplinary Committee for consideration and a formal decision.

4. The Respondent, Al-Gharafa SC, is ordered to pay a fine in the amount of CHF 30,000, within 30 days as from the date of notification of the present decision to FIFA.

5. The final costs of the proceedings in the amount of CHF 20,000 are to be paid by the Respondent, Al- Gharafa SC, within 30 days as from the notification of the present decision, as follows:

a) The amount of CHF 5,000 has to be paid to the Claimant, FC Steaua Bucuresti.

b) The amount of CHF 15,000 has to be paid to FIFA.

(…)”.

15. On 17 September 2015, FIFA communicated to the parties the grounds of the Appealed Decision, following a request of the Appellant, inter alia, determining the following:

“5. (…) [T]he Single Judge acknowledged that the Claimant and the Respondent signed a transfer agreement dated 18 February 2015, in accordance with which the Claimant was entitled to receive from the Respondent, inter alia, the total amount of EUR 2,300,000, payable in one instalment of EUR 1,200,000 within five days after the issuance of the Player’s International Transfer Certificate, i.e. on 23 February 2015, as well as in one instalment of EUR 1,100,000 on 1 June 2015.

(…)

7. In this context, the Single Judge took particular note of the fact that, on 3 June 2015, the Claimant put the Respondent in default of payment, setting a time limit of 10 days in order to remedy the default.

8. Consequently, the Single Judge concluded that the Claimant had duly proceeded in accordance with art. 12bis par. 3 of the Regulations, which stipulates that the creditor (player or club) must have put the debtor club in default in writing and have granted a deadline of at least ten days for the debtor club to comply with its financial obligations.

9. Subsequently, the Single Judge took into account that the Respondent, for its part, held that the communication approaches of the Claimant, in particular the default notice, were addressed to a nonofficial address and, therefore, the Respondent had no obligation to remedy the default.

10. In this regard, the Single Judge considered that the arguments raised by the Respondent cannot be considered a valid reason for non-payment of the monies claimed by the Claimant, in other words, the reasons brought forward by the Respondent in its defence do not exempt the Respondent from its obligation to fulfil its contractual obligations towards the Claimant.

11. Consequently, the Single Judge decided to reject the argumentation put forward by the Respondent in its defence.

12. Having said this and taking into account the documentation presented by the Claimant in support of its petition, the Single Judge concluded that the Claimant had substantiated its claim pertaining to overdue payables with sufficient documentary evidence.

13. On account of the aforementioned considerations, the Single Judge established that the Respondent failed to remit the total amount of EUR 1,200,000 to the Claimant.

(…)

17. The Single Judge established that in virtue of art. 12bis par. 4 of the Regulations he has competence to impose sanctions on the Respondent. Moreover, the Single Judge referred to art. 12bis par. 6 of the Regulations, which establishes that a repeated offence will be considered as an aggravating circumstance and lead to more severe penalty. Bearing in mind that the Respondent has replied to the claim of the Claimant as well as the consideration under number II./14. above, the Single Judge decided to impose a fine on the Respondent, in accordance with art. 12bis par. 4 lit. c) of the Regulations. Furthermore, taking into consideration the amount due of EUR 1,200,000, the Single Judge regarded a fine amounting to CHF 30,000 as appropriate and hence decided to impose said fine on the Respondent”.

16. On 16 October 2015, the First Respondent informed FIFA that the Appellant paid the amount of EUR 1,100,000, corresponding to the second instalment of the transfer compensation as agreed in the Agreement.

III. PROCEEDINGS BEFORE THE COURT OF ARBITRATION FOR SPORT

17. On 7 October 2015, the Appellant submitted a statement of appeal in accordance with Articles R47 and R48 of the Code of Sports-related Arbitration (the “Code”) to the Court of Arbitration for Sport ( “CAS”), challenging the Appealed Decision.

18. With its statement of appeal, the Appellant also requested that its appeal be submitted to a Sole Arbitrator in accordance with Article R50 of the Code.

19. On 20 October 2015, both the First and the Second Respondent informed the CAS that they did not agree with the appointment of a Sole Arbitrator in this matter.

20. On 22 October 2015, the Appellant filed its appeal brief requesting from the CAS:

“FIRST – To set aside the Appealed Decision in full;

SECOND – To confirm that the First Respondent failed to comply with the contractual obligations set out in clause 2.3 of the Transfer Agreement, in casu, to address the invoice regarding the first instalment due as fee for the permanent transfer of the Player;

THIRD – To uphold, in the scenario above, that the Appellant was entitled to hold the payment of the amount established as first instalment for the permanent transfer of the Player until the First Respondent complied with its obligations towards the Employment Contract (cf. Art. 82 of the Swiss CO); and

FOURTH – To confirm that the Appellant shall only comply with the payment of the amount established in the first instalment and due as fee for the permanent transfer of the Player when the First Respondent finally addressed a proper invoice to one of the official addresses set out in clause 3.1 of the Transfer Agreement.

Alternatively and only in the event the above is rejected:

FIFTH – To uphold, assuming but not admitting, that the Appellant is considered to having failed to pay the amount established in the referenced first instalment, that the latter, even though, shall not be considered to have overdue payables in the sense of Art. 12bis of the FIFA RSTP;

SIXTH – To confirm, therefore, that the FIFA Single Judge had no legal basis to impose any sanction on the Appellant since the provisions set out in Art. 12bis of the FIFA RSTP does not apply in the case at hand;

Alternatively and only in the event the above is rejected:

SEVENTH – To confirm, assuming but not admitting, that the provisions set out in Art. 12bis of the FIFA RSTP are valid and may be applicable to the ongoing matter, that the sanction imposed on the Appellant is baseless and disproportionate in accordance to current Lex Sportiva;

EIGHTH – To uphold, assuming but not admitting, that the provisions set out in Art. 12bis of the FIFA RSTP are valid and may be applicable to the ongoing matter, that the sanction imposed on the Appellant shall be reduced to a warning or a reprimand;

NINETH – To establish that any procedure or legal cost determined by the Panel and relating to the proceedings before the FIFA Players’ Status Committee or this arbitration shall be calculated paying due consideration to the terms and conditions as set out in clause 5.1 of the Transfer Agreement”.

21. On 5 November 2015, the CAS Court Office informed the parties that a Sole Arbitrator would be appointed in this matter.

22. On 1 December 2015, the CAS Court Office invited the Appellant to submit proof that it paid the advance of costs within the time limit granted to it, i.e. until 20 November 2015.

23. On 7 December 2015, the Appellant submitted to the CAS the requested bank transfer report, which indicated that the instruction towards the bank had been made on 22 November 2015 because the last day of the time limit granted to the Appellant (the 20th of November) was a bank holiday in Qatar.

24. On 11 December 2015, the First Respondent wrote to the CAS stating that the enclosures to the Appellant’s letter of 7 December 2015 were not legible and requested that a copy of the letter and enclosures be sent again.

25. On 15 December 2015, the Appellant sent again to the CAS via email the aforementioned bank transfer report.

26. On 11 January 2016, the Second Respondent filed a letter requesting that the present appeal be rejected and the Appealed Decision be confirmed in its entirety and that all costs related to the present proceedings as well as the Second Respondent’s legal expenses be borne by the Appellant.

27. On 15 January 2016, the Appellant submitted a translation into English of the request sent to the Appellant’s bank related to the transfer of the advance of costs to the CAS dated 22 November 2015.

28. On 20 January 2016, the First Respondent filed its answer in accordance with Article R55 para. 1 of the Code requesting the CAS to:

“a) Establish that the advance of costs were paid outside the fixed deadline and to declare the appeal inadmissible;

Alternatively to point a) to confirm the decision of the FIFA PSC Single Judge dated 16 July 2015 and, more specifically, hold that the Appellant:

b) correctly received the invoice and the default notices sent by Steaua either via email and/or fax;

c) has overdues towards Steaua for the amount of EUR 1,200,000;

d) the Appellant shall pay interests at a rate of 5% per annum as of 23 February 2015;

e) shall reimburse Steaua Bucharest the procedural costs it incurred at FIFA level.

And in any case to hold that:

f) the Appellant shall bear 100% of arbitration costs at CAS;

Alternatively to f) to hold that:

g) if a violation of due process took place, that FIFA shall bear the arbitration costs of this procedure together with the Appellant, who in any case has overdues payables towards Steaua”.

29. On 22 January 2016, the CAS Court Office invited the parties to inform the CAS whether they prefer a hearing to be held in this matter.

30. On 25 and on 27 January 2016 and on 2 February 2016 respectively, the Second Respondent, the First Respondent and the Appellant informed the CAS Court Office that they did not deem a hearing necessary and that they preferred that the Sole Arbitrator issue an award in this matter based solely on the parties’ written submissions.

31. On 5 February 2016, the CAS Court Office informed the parties that the Sole Arbitrator deems himself sufficiently well-informed to decide this matter based solely on the parties’ submissions, without a hearing, according to Article R57 of the Code.

32. On 22 February 2016, the CAS Court Office issued an order of procedure, which was signed and returned to the CAS on 23 February 2016 by the Second Respondent, on 27 February 2016 by the Appellant and on 10 March 2016 by the First Respondent, all confirming their waiver of a hearing and that their right to be heard has been respected.

33. On 12 May 2016, the Appellant filed by email an uninvited letter with the CAS Court Office enclosing the award rendered by another CAS Panel in the matter CAS 2015/A/4153 between the same Appellant, Mr Nicolas Fedor and FIFA as Respondents and requesting, as already requested in the appeal brief, that the Sole Arbitrator “reduce to a warning or a reprimand the sanction imposed on the Appellant”.

34. On 13 May 2016, the CAS Court Office invited the Respondents to file their observations with regard to the Appellant’s submission.

35. The First Respondent filed its observations on 18 May 2016 and the Second Respondent on 20 May 2016, both in essence requesting that the Appellant’s submission be declared inadmissible due to its late filing and the lack of exceptional circumstances justifying it

IV. SUBMISSIONS OF THE PARTIES

36. The following outline of the parties’ positions is illustrative only and does not necessarily comprise every submission advanced by the parties. The Sole Arbitrator has nonetheless carefully considered all the submissions made by the parties, whether or not there is specific reference to them in the following summary.

37. The Appellant’s submissions, in essence, may be summarized as follows:

- The First Respondent failed to comply with its obligation under section 2.3 of the Agreement, i.e. to provide a valid invoice to the Appellant for the payments of the transfer fee as stipulated in the Agreement. As a result, the Appellant was entitled to delay its performance until the other party discharged its own obligation, in accordance with Article 82 of the Swiss Code of Obligations (CO).

- The Appellant never refused its obligations under the Agreement and that is the reason why it already made the payment of the second instalment to the First Respondent.

- The Appellant argues that the First Respondent did not provide any evidence that the mentioned email of 19 March 2015 did indeed contain as an attachment a default notice to the Appellant and that, at any rate, such communication does not comply with the notification requirements pursuant to clause 3.1 of the Agreement, as it was not sent to the Appellant’s official email address, which was available in the Appellant’s website.

- The Appellant asserts that it never received the second default notice of the First Respondent, which was supposedly sent to the former by facsimile on 3 June 2015 and claims that the First Respondent submitted no proof of receipt of the communication by the Appellant to the FIFA PSC. However, in the event that the First Respondent did in fact sent the second default notice, by sending it after having filed its complaint before FIFA, the First Respondent clearly violated the principle of good faith.

- Considering that the second default notice allegedly sent by the First Respondent, was sent more than 30 days after filing its claim with the FIFA PSC, and also that the claim lodged by the First Respondent with FIFA on 27 April 2015 did not contain any request for the imposition of sanctions as per Article 12bis of the FIFA Regulations, the Appellant concludes that it was the FIFA PSC secretariat that instructed the First Respondent to send the notice to the Appellant, in order to fulfil the requirements of the aforementioned provision. In this respect, the Appellant further argues that by providing instructions to the First Respondent, the FIFA PSC secretariat violated fundamental principles of due process, namely the principle of the equal treatment of the parties.

- The Appellant also puts forward that the alleged second default notice of the First Respondent, assuming that such notice was in fact properly delivered to the Appellant, does not meet the conditions established by the FIFA legislator in Article 12bis of the FIFA Regulations and, therefore, provides no legal basis for the FIFA PSC to impose any sanctions as no such request is made in the claim of the First Respondent lodged with FIFA on 27 April 2015.

- Finally, in the event that the CAS holds that the sanction at hand was imposed with a valid legal basis, the amount of the fine is clearly disproportionate and a warning or a reprimand should be imposed instead.

38. The First Respondent’s submissions, in essence, may be summarized as follows:

- The Appellant failed to pay the advance of costs within the deadline set by the CAS Court Office without any valid excuse and, as a result, the appeal is inadmissible and the arbitration proceedings should be terminated.

- As far as the substance of the case is concerned, the First Respondent argues that the appeal is without merits, that the Appellant does not disputes its obligation to pay the agreed transfer fee and that its goal is to further delay the execution of the payment.

- The First Respondent asserts that it provided the Appellant via email with an invoice related to the payment of the first and second instalment on 24 February 2015. The email was sent to the email address “qnnp@live.com”, which belongs to Mr. Fahd Al Yahri (General Manager of the Appellant), was used during the negotiations between the parties and is also used by the Appellant in the FIFA TMS. Moreover, the First Respondent points out that the same email address was used by the Appellant on 8 October 2015, in order to provide the First Respondent with proof of payment of the second instalment of the transfer fee.

- On 19 March 2015, the First Respondent sent to the Appellant the first default notice by email and, on 3 June 2015, the second default notice was sent via fax and the First Respondent submits a positive fax transmission report to prove it.

- The First Respondent sent the second default notice to the Appellant following FIFA’s request of 2 June 2015 to the former to supplement the petition it had submitted, in order for the requirements of the FIFA Regulations to be met. Such FIFA’s request constitutes no violation of the Appellant’s rights, as alleged in the appeal. On the contrary, it falls within the power of the FIFA judicial bodies. In addition, the First Respondent had every right to supplement or amend its claim, in accordance with Article 9(2) and 9(4) of the FIFA Procedural Regulations. At any case, all procedural irregularities, if any, are cured by the de novo character of the CAS proceedings.

- The Appellant argues in bad faith that it did not receive the invoices or the default notices of the First Respondent. If the Appellant had not received the invoices and default notices, how was it able to make the payment of the second instalment on 6 October 2015?

- In addition, the Appellant is not entitled to refuse payment on the grounds of not having received any proper invoice by the First Respondent as there is no wording in the Agreement to support the view that an invoice from the First Respondent was agreed as a conditio sine qua non for the execution of the payments. Moreover, the Agreement clearly sets out the payment dates and the bank details of the First Respondent.

- The Appellant failed to discharge its burden of proof that it was prevented from making the payments without any valid invoice because of Qatari legislation on money laundering.

- The second notice of the First Respondent meets the requirements set out in Article 12bis of the FIFA Regulations and, as a result, the decision of the FIFA PSC to impose a fine on the Appellant should be upheld.

- Section 5.1 of the Agreement does not apply on the procedural costs as it only covers legal fees and costs of each party and it cannot affect FIFA or CAS rules on awarding a contribution on the other party’s costs.

39. The Second Respondent’s submissions, in essence, may be summarized as follows:

- The introduction of Article 12bis of the FIFA Regulations on 1 March 2015 is intended to establish a stronger system with regard to the respect of financial contractual obligations of clubs towards players and other clubs.

- After receiving the First Respondent’s claim on 27 April 2015, FIFA administration merely informed it that for a claim in the basis of Article 12bis of the FIFA Regulations to be taken at hand, proof of a default notice would need to be provided. In doing so, FIFA administration did not violate the principle of equal treatment of the parties. Such default notice was sent by the First Respondent on 3 June 2015, granting to the Appellant a new deadline of 10 days to comply with its obligations, almost 4 months after the due date.

- Section 3.1 of the Agreement did not refer to any specific email address of the parties or to any particular website. Hence, the FIFA PSC had no reason to question the sending of a document to one of the employees of the Appellant and in an email address which has already been used in the negotiations between the parties (with respect to the first default notice) or that the First Respondent properly fulfilled the requirements set in Article 12bis of the FIFA Regulations (with respect to the second default notice).

- The main obligation of the First Respondent under the Agreement was to release the player in favour of the Appellant and the main obligation of the Appellant was to proceed with the payment of the agreed compensation on the due dates. Therefore, the FIFA PSC rightly concluded that the arguments of the Appellant do not exempt it from fulfilling its contractual obligations towards the First Respondent considering that even in the event that the First Respondent did not address a proper invoice to the Appellant, quod non, the breach of said ancillary obligation would never justify the non-payment of the first instalment of the transfer compensation. The respective argument of the Appellant is merely an indication of its bad faith and dilatory tactics.

- According to the letter and the spirit of Article 12bis of the FIFA Regulations, FIFA judicial bodies, considering the specific circumstances of each case, have the power to impose a sanction on a club that has delayed a due payment for more than 30 days without a prima facie contractual basis and was put in default by the other party, granting the former a deadline of 10 days to fulfil its contractual obligations. In addition, the imposition of the sanction is performed ex officio by the Chamber and is absolutely independent from the existence or not of a respective request from the counterparty, as it constitutes part

of FIFA’s own interest to apply measures aiming at securing the respect of its regulations. CAS jurisprudence goes even further by stating that that it is not up to the party lodging a claim before FIFA to request sanctions (CAS2 2014/A/3707). As a result, the Appellant’s accusation against FIFA of having acted extra petita is unfounded.

- FIFA PSC has the duty to assess the adequacy of the sanction imposed. In the case at hand, considering the level of compliance of the Appellant with its contractual obligations, the Appellant having been already sanctioned with a “warning” in a previous case and the substantial sum due to the First Respondent, the Single Judge was right to conclude that imposing on the Appellant a fine in the amount of CHF 30,000 was fully justified.