Cruzeiro Esporte Clube v. Club Tigres de la UANL

II. FACTUAL BACKGROUND

3. This section of the Award sets out a brief summary of the most relevant facts and the background giving rise to the present dispute, as established on the basis of the Parties’ written submissions and the CAS file. Additional facts may be set out, if and where relevant, in connection with the legal discussion that follows.

4. On 21 June 2016, the Appellant sent a letter to the Respondent by means of which it confirmed to the latter its interest in the permanent transfer of the professional football player R. (hereinafter, the “Player”), offering in this regard a total transfer fee of USD 4,000,000 in the following terms:

“ […]

Re.: Official Offer/R.

In line to Art. 18, par. 3 of the FFA [sic] Regulations on the Status and Transfer of Players (“RSTP”), Cruzeiro E. C. confirms its official interest in the permanent transfer of the professional player R. (“Player”).

For the permanent transfer at stake Cruzeiro E.C. here in offers to Tigres (UANL) a total transfer fee of USD 4,000,000 (four million, dollar), nets, free of taxes, payable in the following manner:

(i) USD 1,000,000 within 24h before the sending of the CTI of the Player.

(ii) USD 1,000,000 due in 01 Noviembre [sic] 2016;

(iii) USD 1,000,000 due in 01 July 2017;

(iv) USD 1,000,000 due in 01 Noviembre [sic] 2017.

In case that Cruzeiro doesn’t pay in the limits established, Cruzeiro will have to pay interest calculated at 4% monthly of the payable amount. […]”.

5. On 25 June 2016, the Appellant and the Respondent entered into a transfer agreement (hereinafter the “Transfer Agreement”) pursuant to which the Player was transferred from Tigres to Cruzeiro. In its relevant part, the Transfer Agreement reads as follows:

“TRANSFER AGREEMENT “CONTRATO DE TRANSFERÊNCIA

[…] […]

6. 2. Transfer fee 10. 2. Indenização de Transferência

7. 2.1. CRUZEIRO undertakes to pay to 11. 2.1. CRUZEIRO obrigar-se a pagar ao TIGRES the total amount of USD 4,000,0000 TIGRES o valor total de USD 4,000,000 (quatro [sic] (four million dollars) net, free of taxes, as milhões de dólares) líquidos da seguinte maneira: follows: 12. (i) USD 1,000,000 nets, free of taxes, (i) USD 1,000,000 NET em 24h contados within 24h before the sending of the ITC do recebimento do ITC do ATLETA via of the PLAYER via TMS; TMS;

(ii) USD 1,000,000 nets, free of taxes, due (ii) USD 1,000,000 NET devido em 1 de on 1 November 2016; novembro de 2016;

(iii) USD 1,000,000 nets, free of taxes due on (iii) USD 1,000,000 NET devido em 1 de 1 July 2017; and Julho de 2017; e

(iv) USD 1,000,000 nets, free of taxes due on (iv) USD 1,000,000 NET devido em 1 de 1 November 2017. novembro de 2017.

[…] […]

8. 2.3. In the event the CRUZEIRO fails to 13. 2.3. Na hipótese de o CRUZEIRO deixar de provide the payment of the fee amount agreed above pagar o montante indenizatório estipulado acima, within the agreed a default interests will accrue on nos prazos determinados, aplicar-se-á juros de mora the full amount outstanding at the rate of 4% per de 4% ao ano computados sobre o valor total em month rate from the due date until the date of mora, da data devida até a data do pagamento. payment. 14. […]

9. […] 7. Legislação Aplicável 7. Applicable Legislation 7.1. Este Contrato foi elaborado e deverá ser 7.1. This Agreement shall be governed by and interpretado de acordo os vários regulamentos da construed in accordance with the various regulations FIFA, em particular, como o Regulations on the of FIFA, in particular, to the Regulations on the Status and Transfer of Players (“RSTP”). Status and Transfer of Players (“RSTP”).

8. Resolution of Disputes 8. Resolução de Disputas 8.1. Any eventual disputes or controversies 8.1. Qualquer eventual disputa ou controvérsia arising out of or in connection with this Agreement proveniente ou conexa com este Instrumento deverá shall be settled by the FIFA Players’ Status ser dirimida pelo FIFA Players’ Status Committee. Committee. Any appeal to a ruling of the FIFA Qualquer recurso à decisão do FIFA Players’ Players’ Status Committee shall be heard by the Status Committee deverá ser analisado pelo Court of Arbitration for Sports (“CAS”) based in Tribunal Arbitral do Esporte (“CAS”) em Lausanne, Switzerland. The language to be used in Lausanne, Suíça. A língua as ser utilizada durante any arbitral proceedings shall be English. qualquer procedimento arbitral deverá ser a Inglesa.

[…] […]

11. Language 11. Língua 11.1. This Agreement is executed in English 11.1. O presente Instrumento foi confeccionado and Portuguese. However, the English language em Inglês e Português, todavia, apenas a versão em version shall be the only valid and binding document Inglês será válida e que efetivamente reflete o acordo

reflecting the Agreement between the parties and entre as partes, bem como deverá governar toda e shall govern any dispute over the terms and qualquer disputa acerca dos termos e obrigações obligations arising under this Agreement. oriundas deste Instrumento.

[…]”. […]”.

III. PROCEEDINGS BEFORE THE SINGLE JUDGE OF THE PLAYERS’ STATUS COMMITTEE

6. On 16 February 2018, the Respondent filed a claim before the FIFA Players’ Status Committee (hereinafter “FIFA PSC”) against the Appellant, claiming the payment of USD 1,000,000 corresponding to the fourth installment of the Transfer Agreement, plus default interest at a rate of 5% per month as of 2 November 2017 in accordance with clause 2.3 of the aforesaid Transfer Agreement.

7. On 5 June 2018, the Single Judge of the FIFA PSC rendered the following Decision:

1. “The claim of the Claimant, Tigres, is partially accepted.

2. The Respondent, Cruzeiro Esporte Clube, has to pay to the Claimant, Tigres, within 30 days as from the date of notification of the present decision, the amount of USD 1,000,000 plus 5% interest p.a. on said amount as from 2 November 2017 until the date of effective payment.

3. If the aforementioned sum, plus interest as established above, is not paid within the aforementioned deadline, the present matter shall be submitted, upon request, to FIFA’s Disciplinary Committee for consideration and a formal decision.

4. Any other claims lodged by the Claimant, Tigres, are rejected.

5. The final costs of the proceedings in the amount of CHF 20,000 are to be paid by the Respondent, Cruzeiro Esporte Clube, within 30 days as from the date of notification of the present decision, as follows:

5.1. The amount of CHF 15,000 has to be paid to FIFA to the following bank account […]

5.2 The amount of CHF 5,000 has to be paid directly to the Claimant, Tigres.

6. The Claimant, Tigres, is directed to inform the Respondent, Cruzeiro Esporte Clube, immediately and directly of the account number to which the remittances under points 2., and 5.2. above are to be made and to notify the Players’ Status Committee of every payment received”.

8. On 2 July 2018, the Appellant requested FIFA to provide the grounds of the Decision rendered by the Single Judge of the FIFA PSC.

9. On 25 October 2018, FIFA notified the parties the grounds of the Decision passed by the Single Judge of the FIFA PSC on 5 June 2018.

IV. PROCEEDINGS BEFORE THE COURT OF ARBITRATION FOR SPORT

10. On 16 November 2018, the Appellant filed a Statement of Appeal before the Court of Arbitration for Sport (the “CAS”) against the Respondent, challenging the Decision rendered by the Single Judge of the FIFA PSC on 5 June 2018 (hereinafter the “Appealed Decision”), with the following requests for relief:

“On the merits:

FIRST – To dismiss in full the Appealed Decision;

SECOND – To accept the present appeal;

At any rate:

THIRD – To order the Respondent to pay all arbitration costs and be ordered to reimburse the Appellant the minimum CAS court office fee of CHF 1,000 and any other advance of costs paid to the CAS;

FOURTH – To order the Respondent to pay to the Appellant any contribution towards the legal and other costs incurred and regarding the ongoing proceedings in an amount to be duly established at discretion of the Panel”.

11. In its Statement of Appeal, the Appellant requested to submit the present dispute to a Sole Arbitrator.

12. On 3 December 2018 the Appellant filed its Appeal Brief with the following requests for relief:

“FIRST – To set aside the decision of the Single Judge of the FIFA PSC to impose default interest at rate of 5% per annum as from 2 November 2017;

SECOND – To confirm that any default interest eventually apply over the fourth instalment due as transfer fee for the permanent transfer of the Player shall be 4% per annum as from 21 March 2018; and

THIRD – To order the Respondent to pay all arbitration costs and be ordered to reimburse the Appellant the minimum CAS court office fee of CHF 1,000 and any other advance of costs (if applicable) paid to the CAS; and

FOURTH – To order the Respondent to pay to the Appellant any contribution towards the legal and other costs incurred and regarding the ongoing proceedings amounting CHF 5,000”.

Alternatively and only in the event the above is rejected

FIFTH – To confirm that any default interest eventually applied over the fourth instalment due as transfer fee for the permanent transfer of the Player shall be 5% por annum as from 21 March 2018 instead of 2 November 2017 as wrongly decided in the Appealed Decision”.

13. On 7 December 2018, the Respondent sent a letter to the CAS stating that it agreed to submit the present matter to a Sole Arbitrator.

14. On 20 December 2018, FIFA informed the CAS that it renounced its right to intervene in the present arbitration proceeding.

15. On 28 December 2018, the Respondent filed its Answer before the CAS, requesting the following:

“FIRST: Acknowledgement of delivery in the due time and proper from of the answer the Appeal Brief filed by CRUZEIRO.

SECOND: To establish that the English version of clause 2.3 of the Transfer Agreement shall prevail

THIRD: CLUB TIGRES must be absolved of any CAS arbitration costs and/or any legal costs.

FOURTH: To ordered [sic] club CRUZEIRO to pay CLUB TIGRES the total amount of USD 1,000,000 plus 5% interest p.a. on said amount as from November, 02, 2017 until the date of effective payment”.

16. On 10 January 2019, pursuant to Article R54 of the CAS Code and on behalf of the President of the CAS Appeals Arbitration Division, the CAS Court Office notified the parties that Mr. Juan Pablo Arriagada Aljaro, attorney-at-law in Santiago, Chile, had been appointed as the Sole Arbitrator in this case. No objections were raised by the parties as to the appointment of the Sole Arbitrator.

17. On 9 and 11 January 2019, both parties informed the CAS that they preferred the Sole Arbitrator to render an award based solely on the parties’ written submissions.

18. On 21 January 2019, the CAS Court Office informed the parties that, pursuant to Article R57 of the CAS Code, the Sole Arbitrator had decided not to hold a hearing in this case.

19. On 5 February 2019, the CAS Court Office issued the Order of Procedure to the parties, which was duly countersigned by them.

V. SUMMARY OF THE PARTIES’ SUBMISSIONS

20. The following summary of the parties’ positions is merely illustrative and does not necessarily comprise each and every contention put forward by the parties. However, for the purposes of the legal analysis that follows, the Sole Arbitrator has carefully considered all the submissions

made by the parties, even if there is no specific reference to those submissions in the following summary.

V.1. The Appellant

21. The Appellant and the Respondent signed a Transfer Agreement on 25 June 2016 in order to establish the terms and conditions regarding the permanent transfer of the Player. The Transfer Agreement was executed in English and Portuguese (i.e. it was drafted in two columns, one in English and the other one in Portuguese).

22. Clause 2.3 of the English version of the Transfer Agreement established that, in case the Appellant failed to pay the transfer fee in the stipulated four equal installments of USD 1,000,000, a default interest rate of 4% per month would accrue over the outstanding amount from the due date until the date of payment. However, the same clause 2.3 in the Portuguese version of the Transfer Agreement stated that the interest rate to be applied to the amount in default if the Appellant failed to pay the transfer fee within the established dates was a rate of 4% per year (and not per month, as established in the English version of the Transfer Agreement).

23. The Single Judge of the FIFA PSC determined that the Appellant had to pay the fourth installment foreseen in the Transfer Agreement (i.e. USD 1,000,000). With regard to the interest rate to be applied to such amount, he concluded that the interest rate agreed by the parties was manifestly disproportionate and exorbitant and thus it cannot be enforced. Instead, the Single Judge of the PSC ordered Cruzeiro to pay a default interest at a rate of 5% per annum on the outstanding amount of USD 1,000,000 as of 2 November 2017.

24. The Appellant considers that the decision of the Single Judge of the FIFA PSC dismissing the default interest rate of 4% per month is correct. However, the Appellant sustains that there was no reason to impose a default interest of 5% p.a. instead of 4% p.a., as set out in the Portuguese version of the Transfer Agreement, since this version of the agreement reflected the real intention of the parties when they negotiated and signed the Transfer Agreement.

25. Therefore, although clause 11.1 of the Transfer Agreement stipulates that the English version should prevail over the Portuguese one, the Appellant and the Respondent never meant, nor discussed previously, to fix a default interest rate of 4% per month and, therefore, it should be considered that the English version does not reflect the true will of the parties.

1. Furthermore, in accordance with Article 18, para. 1 of the Swiss Code of Obligations, when the interpretation of a contract is in dispute, the judge has to seek the true and common intention of the parties without dwelling on any inexact or incorrect statements that may have been used either in error or by way of disguising the true nature of the agreement and, when the agreed real intention of the parties cannot be established, the contract must be interpreted according to the requirement of good faith.

2. Additionally, the Appellant affirms that the date of imposition of the default interest was wrongly assumed to be 2 November 2017 by the Single Judge of the FIFA PSC. The correct

date should have been the day when the Respondent formally reminded the Appellant of the due amount, i.e. on 21 March 2018.

V.2. The Respondent

3. Pursuant to the Transfer Agreement the Appellant had the obligation to pay the Respondent a total transfer fee amounting to USD 4,000,000 in four equal installments (Clause 2 of the Transfer Agreement). In this regard, it is undisputed that the Appellant has acknowledged its failure to pay the fourth of the above-mentioned installments to the Respondent (i.e. USD 1,000,000 that should have been paid on 1 November 2017).

4. In addition, although the Transfer Agreement was executed in English and Portuguese, in accordance with clause 11.1 of the Transfer Agreement, the parties agreed that the only valid and binding version that shall govern any dispute over the terms and obligations arising under the Transfer Agreement should be the English version. Therefore, it is clear that the English version of the Transfer Agreement should prevail in this controversy.

5. In addition, the Respondent rejects the Appellant’s submission according to which the real will of the parties was the one reflected in the Portuguese version of the Transfer Agreement (i.e. to stipulate a default interest rate of 4% per year). In its view, this would be proven by the fact that, on 21 June 2016, the Appellant sent a letter to the Respondent proposing the permanent transfer of the Player for the total transfer fee of USD 4,000,000, payable in four equal instalments with a default interest rate of 4% per month in the event the Appellant failed to pay the installments within the agreed dates. Therefore, the real will of the parties was to fix a default interest rate of 4% per month.

6. Finally, since the Transfer Agreement was drafted by the Appellant (i.e. it is drafted in the Appellant’s letterhead), in accordance with the principle “in dubio contra stipulatorem”, the contract must be interpreted against the drafter when the terms of an agreement are ambiguous. As a result, the Appellant’s appeal shall be dismissed.