Youness Bengelloun v. CSKA-Sofia, Fédération Internationale de Football Association (FIFA)

II. FACTUAL BACKGROUND — A. Background Facts

5. Below is a summary of the factual background of the case based on the Parties’ oral and written submissions on the file and the relevant documentation produced in this appeal. Additional facts and allegations may be set out, where relevant, in connection with the further legal discussion. While the Panel has considered all the facts, allegations, legal arguments and evidence submitted by the parties in the present proceedings, it refers in this award only to the submissions and evidence it considers necessary to explain its reasoning.

6. On 23 July 2012, the Player signed a professional contract with the football club PFC CSKA Sofia (“CSKA” or the “Old Club”) valid until 30 June 2015 against a monthly salary of EUR 12,600 plus performance bonus and other benefits (the “Employment Contract”).

7. On 26 December 2012, the Player lodged a claim against CSKA with the FIFA Dispute Resolution Chamber (the “FIFA DRC”) requesting, inter alia, payment of outstanding salaries in the amount of EUR 58,367.75 and EUR 400,032.25 corresponding to compensation for breach of the Employment Contract by CSKA without just cause.

8. On 21 May 2015, the FIFA DRC partially accepted the Player’s claim and ordered CSKA to pay to the Player the amount of EUR 51,566 plus 5% interest p.a. corresponding to outstanding salaries and EUR 355,730 plus 5% interest p.a. corresponding to compensation for breach of contract (the “FIFA DRC Decision”). The FIFA DRC Decision became final and binding.

B. Proceedings before the FIFA Disciplinary Committee

9. On 15 July 2015, the Player informed FIFA that CSKA had failed to comply with the terms of the FIFA DRC Decision and requested the opening of disciplinary proceedings before the FIFA Disciplinary Committee (“FIFA DC”) against CSKA in accordance with Article 64 of the FIFA Disciplinary Code (“FDC”).

10. After the end of the 2014/2015 season, CSKA was relegated in the amateur level due to financial difficulties.

11. On 31 July 2015, the CSKA management requested the initiation of insolvency proceedings for the club before the Sofia City Court.

12. On 2 September 2015, the FIFA DC sent a letter to the Player stating that “We (…) wish to provide you, for your information and any action you may deem appropriate, with a copy of the documentation that we received in connection with the club PFC CSKA Sofia. Please note that we will revert to you in due course and keep you informed of any further developments in this regard”. Attached to this letter was a

letter dated 26 August 2015 and signed by the Executive Director of CSKA stating that CSKA “is commencing a procedure of insolvency and at the present time is unable to fulfil its financial commitments regulated with the above said decisions (…)”.

13. On 2 October 2015, the Sofia City Court passed its decision 1581 and declared the insolvency of CSKA, initiated a “procedure of bankrupt”, appointed a temporary trustee in bankruptcy and summoned the first meeting of creditors.

14. The Player was registered to a list of creditors in the CSKA bankruptcy proceedings dated 2 October 2015 signed by the temporary trustee for an amount of BGN 992,720.63.

15. After the first meeting of creditors, the temporary trustee sent a notice to inform known foreign creditors of the insolvency proceedings and invite them to submit their claims in writing before the bankruptcy Sofia court “up to one month after the entry into the Commercial register with the Registry Agency of the decision for the institution of the bankruptcy proceedings, as the creditor shall indicate the grounds and amount of the claims privileges and security, legal seat and submit documentary evidence for its claims (Decision dated 02.10.2015 has been entered into the Commercial register on 5th October 2015). Claims which have been submitted after this date, but not later than two months upon expiration of the term, shall be entered in the list of submitted claims and shall be accepted wider the order provided by the law, but the creditor could not challenge the already accepted claim or the distribution made and shall be satisfied by the balance in the converted into cash property if there has been made distribution, as the additional expenses for the acceptance of his claim shall be borne by him. After the expiration of this term of all the claims, which have occurred until the date of institution of bankruptcy proceedings could not be submitted”. The Player, being domiciled in France at the time, did not receive such notice.

16. The Player’s claim was not registered in the Commercial Register.

17. On 16 December 2015, the Secretariat to the FIFA DC informed the Player and CSKA by letter, that disciplinary proceedings were formally opened against CSKA in respect of a violation of Article 64 FDC and that the proceedings would be suspended until CSKA’s liquidation process “finalises in accordance with Bulgarian law”. Attached to this letter was an undated letter signed by the Executive Director of the BFU informing FIFA on the specifics of the insolvency procedures under Bulgarian law, as well as a letter dated 7 October 2015 and signed by the same person informing FIFA that “by decision No 1581 of October 2, 2015, the Sofia City Court declared the insolvency of PFC “CSKA” Sofia and fixed the date of insolvency – December 31, 2014. (…)” and enclosing a copy of said decision.

18. On 10 May 2016, the Sofia City Court passed its decision 2837 and ruled on the claims admitted in the bankruptcy proceedings, the Player’s claim not being among them.

19. In June 2016, PFC Litex Lovech, having been previously excluded from the national championship by the BFU due to disciplinary offences, changed its name to PFC CSKA-Sofia. PFC CSKA-Sofia was admitted to CSKA’s home stadium and at the beginning of the 2016/2017 season (after only one season in the amateur level) was promoted into the “First Professional League”, the top-tier division of professional football in Bulgaria.

20. On 13 July 2016, Mrs. Dora Mileva-Ivanova, the permanent trustee in the CSKA bankruptcy proceedings, informed FIFA about the status of the bankruptcy proceedings in relation to FIFA disciplinary proceedings initiated by another player, Mr. Civard Sprockel, against CSKA.

21. On 16 November 2016, the Player sent a letter to FIFA requesting that the disciplinary proceedings be continued and that PFC CSKA-Sofia be considered as one and the same entity as CSKA. The Player referred to the fact that he was registered on the list of creditors of the club in the national insolvency proceedings, providing an extract thereof.

22. On 16 June 2017, Mrs. Mileva-Ivanova published the “First partial appropriation account for distribution of funds” to CSKA creditors, the Player not being among them, amounting to BGN 7,835,367.50.

23. On 8 September 2017, the Secretariat to the FIFA DC acknowledged receipt of the Player’s letter of 16 November 2016 and further stated that “(…) we wish to inform the parties that we are closely investigating the current situation of the club PFC CSKA Sofia. In this sense, we would like to underline that we will inform you as soon as we have any new relevant information at our disposal”.

24. On 13 September 2017, the General Secretary of the BFU wrote to FIFA that “By decision No. 1584/09.09.2016, the Sofia City Court has declared PFC “CSKA” Sofia in bankruptcy and terminated that club’s activity as well as the activity of all management bodies. It announced also the sale of all club property and the distribution of all funds received between the club creditors. On May 30, 2017, an auction for the sale of the entire property of the club, which was won for the amount of BGN 8 million (about EUR 4 090 000) was held. A breakdown has been prepared between the 143 creditors approved by the court. The Player Civard Sposkel (sic) is included in the list of creditors under No. 123 with an amount of BGN 19 853 (about EUR 10 150). After completing the procedure of a (possible) legal appeal by not satisfied creditors, this amount will be paid to the creditors according to the final distribution among them. According to Article 27, Paragraph 1, Item 2 of the BFU Statute, the membership of any club declared in bankruptcy shall be terminated. The termination of the membership of PFK “CSKA” Sofia is stated by a decision of the BFU Executive Committee that was adopted at a meeting on June 20, 2017. The decision of the BFU Executive Committee will be submitted for consideration by the BFU Congress, to be held in early 2018”.

25. On 19 March 2018, the Player requested FIFA again, to execute the FIFA DRC Decision, this time against PFC CSKA-Sofia, since it was again playing in the highest division of the Bulgarian championship and, pursuant to CAS jurisprudence and FIFA practice, it should be considered as “sporting successor” of CSKA.

26. On 7 November 2019, the Sofia City Court passed its decision 5958 and allowed the trustee to pay the amounts listed in the 16 June 2017 list to the CSKA creditors.

27. On 22 January 2020, FIFA reopened the disciplinary proceedings against PFC CSKA-Sofia for potential breach of Articles 15 and 64 FDC.

28. On 5 February 2020, PFC CSKA-Sofia submitted its position denying that it was the sporting successor of CSKA as it is a separate legal entity that was created out of PFC Litex Lovech.

PFC CSKA-Sofia further submitted that the Player “omitted to file a claim against CSKA and did not register himself in these bankruptcy proceedings”.

29. On 7 February 2020, the Player replied to PFC CSKA-Sofia’s submission denying its arguments.

30. On 12 February 2020, the FIFA DC passed its decision in this matter, dismissed all charges against PFC CSKA-Sofia and terminated the disciplinary proceedings (the “Appealed Decision”).

31. On 20 March 2020, the grounds of the Appealed Decision were notified to the parties, determining inter alia the following:

“(…)

a. Whether the new Club, PFC CSKA-Sofia, is liable for the debts incurred by the original Debtor

(…)

19. In these circumstances, CAS already considered that a “new” club had to be considered as the “sporting successor” of another one in a situation where a) the “new” club created the impression that it wanted to be legally bound by the obligations of its predecessor, i.e. the “old” club, b) the “new” club took over the licence or federative rights from the “old” club and c) the competent federation treated the two clubs as successors of one another. By the same token, a “sporting succession” is the result of the fact that 1) a new entity was set up with the specific purpose of continuing the exact same activities as the old entity, 2) the “new” club accepted certain liabilities of the “old” club, 3) after the acquisition of the assets of the “old” club, the “new” club remained in the same city and 4) the “new” club took over the licence or federative rights from the “old” club.

20. Further, the issue of the succession of two sporting clubs might be different than if one were to apply civil law regarding the succession of two separate legal entities. In particular, it is recalled that according to CAS, a club is a sporting entity identifiable by itself that generally transcends the legal entities which operate it. Consequently, elements to consider are amongst others the name, the logo and colours, the registration address and/or the managing board of the club.

21. For the sake of completeness, the Member of the Committee wishes to point out that this established jurisprudence from CAS has now been reflected in the 2019 FDC, under art. 15 par. 4 which states that “The sporting successor of a non-compliant party shall also be considered a non-compliant party and thus subject to the obligations under this provision. Criteria to assess whether an entity is to be considered as the sporting successor of another entity are, among others, its headquarters, name, legal form, team colours, players, shareholders or stakeholders or ownership and the category of competition concerned”.

(…)

26. In light of the aforementioned considerations, it was held that the fact that the new Club uses elements that constituted the identity of the original Debtor, combined with its intention to appear as the original Debtor, had to prevail over the arguments put forward by the new Club, such as its ownership, license, football teams

and legal entities being different from those of the original Debtor. It was therefore decided that the new Club was to be considered as the sporting successor of the original Debtor.

27. Having taken all the above into account and on the basis of the information and documentation at his disposal, the Member of the Committee decides to endorse the conclusions of the Chairman and the Deputy Chairman of the Disciplinary Committee and considers that there is no other alternative but to conclude that the new Club, PFC CSKA-Sofia, is to be regarded as the sporting successor of the original Debtor, PFC CSKA Sofia.

28. In this regard, the Member of the Committee notes that neither the original Debtor nor the new Club have complied with the DRC decision dated 21 May 2015 as neither club has paid the outstanding amounts to the Creditor.

29. As such, following the jurisprudence of the FIFA Disciplinary Committee, the Member of the Committee concludes that, in principle, the sporting successor, i.e. the new Club, of a non-compliant party, i.e. the original Debtor, shall also be considered a non-compliant party and is thus subject to the obligations under art. 64 of the 2017 FDC.

b. Whether the new Club, PFC CSKA-Sofia, is responsible to pay the amounts imposed in the DRC decision

30. First and foremost, the Member of the Committee stresses that the original Debtor went bankrupt. In this context, and as established already by CAS, it appears relevant for the legal assessment of this case to analyse the diligence of the Creditor in recovering his debt in order to assess as to whether a sanction can be imposed on the new Club, i.e. whether the Creditor also contributed to create the breach of art. 64 of the 2017 FDC as it could be that his credit would have been paid in the bankruptcy proceedings and therefore no sanction may be imposed.

31. In this regard, the Member of the Committee first recalls that art. 64 of the 2017 FDC empowers the Disciplinary Committee to impose sanctions on a club that failed to respect a financial decision rendered by a body, a committee or an instance of FIFA or in a subsequent CAS award. In other words, a club will be sanctioned in the event it did not respect a financial decision by means of which it was ordered to pay a certain amount to another person (such as a player, a coach or a club).

32. Secondly, the Member of the Committee notes that, as mentioned above, CAS already discussed the possibility for the Disciplinary Committee to impose sanctions in accordance with art. 64 of the FDC on a new club that was considered as the successor of the bankrupt club. In particular, CAS decided that no disciplinary sanctions could be imposed on the new club, should the player fail to claim his credit in the bankruptcy proceedings of the former/bankrupt club.

33. Bearing the above in mind, the Member of the Committee shares CAS conclusion that there is no certainty that a creditor will receive the outstanding amounts in the bankruptcy proceedings but there is at least a theoretical possibility that he could recover his credit in the bankruptcy proceedings instead of remaining passive and pretending that disciplinary sanctions should be imposed on the new club, irrespective of his diligence or negligence in attempting to recover his credit.

34. As a result, should a creditor fail to pursue his claim in the bankruptcy proceedings, such creditor will be, in principle, precluded from requesting disciplinary sanctions to be imposed on the new club that took over from the bankrupt club. In such a situation, the creditor, by his inaction, somehow contributed to create the breach by the bankrupt club of art. 64 of the FDC.

35. The Member of the Committee concedes that bankruptcy proceedings before national courts are complex, lengthy and differ from one country to another and that their outcomes are hardly predictable. However, in light of the aforementioned CAS award, it is of paramount importance that a creditor seeking to recover his credit participates in the bankruptcy proceedings at national level.

36. Should, however, a new club appear and the creditor claim that this new club should be considered as the successor of the bankrupt one, the Member of the Committee considers that the Disciplinary Committee may only decide on questions relating to the succession of the former club and the liability of the new club towards the debts of the former one provided that the creditor has first participated in the bankruptcy proceedings.

37. Turning back to the case at hand, the Member of the Committee observes that the new Club claimed that the Creditor had been duly informed of the bankruptcy proceedings and had the opportunity to file a claim within those proceedings. However, the new Club submitted that for an unknown reason the Creditor decided not to participate in the bankruptcy proceedings and, therefore was negligent as he failed to properly register his claim in the aforementioned bankruptcy proceedings.

38. Bearing the above in mind, and taking into consideration that the Creditor did not register his claim during the bankruptcy proceedings as he is not listed on the list of creditors dated 16 June 2017, it appears that the Creditor decided not to participate in the bankruptcy proceedings – or at least remained passive –, thereby waiving his right to collect his credit in the bankruptcy proceedings.

39. As a result, the Member of the Committee concludes that the Creditor failed to perform the expected due diligence that the circumstances demanded, and hence, contributed to the non-compliance by the original Debtor, and subsequently by the new Club, of the decision passed on 21 May 2015 by the Dispute Resolution Chamber.

40. Therefore, although the new Club, PFC CSKA-Sofia, is to be considered the sporting successor of the original Debtor, PFC CSKA Sofia, the Member of the Committee resolves that no disciplinary sanctions shall be imposed on the new Club and all charges against the latter shall be dismissed as a result of the lack of diligence of the Creditor in collecting his credit in the insolvency proceedings”.

III. PROCEEDINGS BEFORE THE COURT OF ARBITRATION FOR SPORT

32. On 14 April 2020, the Appellant lodged a Statement of Appeal in accordance with Articles R47 and R48 of the Code of Sports-related Arbitration (the “Code”) with the Court of Arbitration for Sport (“CAS”), challenging the Appealed Decision. With its Statement of Appeal, the Appellant nominated Mr. Manfred P. Nan, Attorney-at-law in Arnhem, the Netherlands, as arbitrator.

33. On 23 April 2020, FIFA informed the CAS Court Office that the Respondents agreed to nominate Mr. Patrick Lafranchi, Attorney-at-law in Bern, Switzerland, as arbitrator.

34. On 15 May 2020, the Appellant filed its Appeal Brief, in accordance with Article R51 of the Code.

35. On 29 May 2020, the CAS Court Office informed the Parties that the Panel appointed to decide this matter had been constituted as follows:

President: Mr Sofoklis P. Pilavios, Attorney-at-law in Athens, Greece Arbitrators: Mr. Manfred P. Nan, Attorney-at-law in Arnhem, the Netherlands Mr. Patrick Lafranchi, Attorney-at-law in Bern, Switzerland.

36. On 7 July 2020, the Second Respondent filed its Answer, in accordance with Article R55 of the Code.

37. On 13 July 2020, the First Respondent filed its Answer, in accordance with Article R55 of the Code.

38. On 21 July 2020, the Appellant and the Second Respondent informed the CAS Court Office that they prefer a hearing to be held in this matter and the First Respondent that it did not consider a hearing necessary.

39. On 9 October 2020, a hearing took place at the CAS Court Office in Lausanne, Switzerland. The President of the Panel and the parties were present in person and Mr. Manfred P. Nan and Mr. Patrick Lafranchi participated by videoconference.

40. The Panel sat in the following composition:

President: Mr Sofoklis P. Pilavios, Attorney-at-law in Athens, Greece Arbitrators: Mr. Manfred P. Nan, Attorney-at-law in Arnhem, the Netherlands Mr. Patrick Lafranchi, Attorney-at-law in Bern, Switzerland.

41. The Panel was assisted by Mr Fabien Cagneux, CAS Counsel.

42. The hearing took place in the presence of:

a) For the Appellant: Mr. Antonio Rigozzi, Mr. Riccardo Coppa (Counsel), and Mr. Youness Bengelloun (in person)

b) For the First Respondent: Mr Miguel Liétard Fernández-Palacios (FIFA Director of Litigation) and Mr Jaime Cambreleng (FIFA Head of Litigation)

c) For the Second Respondent: Mr. Marc Cavaliero, Ms. Carol Etter (Counsel), Mr. Georgi Cholakov (Director of Legal at PFC CSKA-Sofia) and Mrs. Mileva-Ivanova (witness).

43. At the outset of the hearing, the Parties confirmed that they had no objections against the constitution of the Panel.

44. At the conclusion of the hearing, the Parties confirmed that their right to be heard and to be treated equally in the present proceedings before the Panel had been fully respected, following which the Panel closed the hearing.

45. On 16 October 2020, the CAS Court Office invited the Appellant to submit his comments on the award rendered in the case CAS 2019/A/6461 relied upon by the First and the Second Respondent at the hearing.

46. On 21 October 2020, the Appellant submitted his comments with respect to the abovementioned award.

47. On 23 October 2020, the Panel allowed the Second Respondent to submit its comments with respect to the award CAS 2019/A/6461 inviting it, upon request of the Appellant, to limit its submission on the content of the award and not to comment on the Appellant’s arguments that were not rebutted during the hearing.

48. On 30 October 2020, the Second Respondent submitted its comments with respect to the abovementioned award.

IV. SUBMISSIONS OF THE PARTIES

49. The following outline of the Parties’ positions is illustrative only and does not necessarily comprise every contention put forward by the Parties. The Panel, indeed, has carefully considered all the written and oral submissions made by the Parties, even if there is no specific reference to those submissions in the following summary.

50. The Appellant’s submissions, in essence, may be summarised as follows:

- The Appealed Decision correctly determined that PFC CSKA-Sofia is the sporting successor of CSKA based on the following: the names PFC CSKA-Sofia and PFC CSKA Sofia are almost identical; the two entities are registered at the same address and play their home matches at the same stadium, i.e. “Bulgarian Army Stadium”, the historical stadium of CSKA, located at Boulevard Dragan Tsankov 3, BG-1504, Sofia; the official logo, the colours, the uniforms, the club’s official website are exactly the same; in fact, according to the official website and the public statements of the club, the two entities share the same football history and the same sporting achievements.

- As a result, and in line with relevant CAS jurisprudence, the Appealed Decision ruled correctly that PFC CSKA-Sofia, being the sporting successor of CSKA, shall also be considered a non-compliant party and is, therefore, subject to the obligations under Article 64 FDC.

- However, the FIFA DC erroneously ruled that the above principles cannot apply to PFC CSKA-Sofia because of the Appellant’s alleged “lack of diligence” in recovering his credit in the Bulgarian bankruptcy proceedings for the following reasons: (i) there is no link between the two procedures, except for the principle prohibiting double recovery; other

than that, the Appellant’s conduct in the bankruptcy proceedings is irrelevant for the FIFA disciplinary proceedings against PFC CSKA-Sofia; (ii) there have been flaws in the national bankruptcy proceedings (in the form of violations of provisions of the European Insolvency Regulation) significantly affecting the Appellant’s right to lodge his claim in the national bankruptcy proceedings and, as such, precluding any limitation of the sporting succession doctrine based on alleged negligence in such proceedings; (iii) there is no “lack of diligence” by the Appellant, who was initially registered to the list of creditors in the bankruptcy proceedings but afterwards removed without any reason and obviously without him knowing about that, and he was not duly informed as the correspondence received was belated, incomplete and unclear. In fact, it was only after the BFU letter of 13 September 2017 that the Appellant became aware that he was not registered on the Final List of Creditors dated 16 June 2017.

- His alleged negligence was not the reason why the Appellant did not get paid through the bankruptcy proceedings. Under Bulgarian law, the amount due for breach of the employment contract, even if it is definitively recognised by FIFA (or, on appeal, by CAS), is not admissible in the national bankruptcy proceedings. That is why the claims of several players against CSKA were not satisfied in full, as they did not receive any amounts corresponding to compensation for breach of contract. Consequently, for (at least) the (substantial) part of the claim awarded as compensation for breach of contract, the Appellant did not even have the “theoretical possibility” to recover his claim that was (validly and definitively) granted by the FIFA DRC.

- With respect to the CAS 2019/A/6461 case, the Appellant submitted that the findings of the CAS Panel in that case strongly corroborate his position that the Appealed Decision correctly held that the Second Respondent is the sporting successor of CSKA as the same key elements justifying the sporting succession are present in this matter as well. Moreover, the Appellant claims that said award cannot be relied upon to refuse to consider his arguments submitted in the present case as the Panel in that case was not presented with the same arguments as the ones submitted by the Appellant in the present case, namely that recovery through bankruptcy proceedings and seeking application of Article 64 FDC are two separate avenues that should be treated independently. In addition, in CAS 2019/A/6461, the Panel decided that the “diligence exception” of the award CAS 2011/A/2646 is no blanket rule, that the assessment of diligence should be made based on the specific circumstances of each case and that the mere fact that the creditor has not validly registered his claim in the bankruptcy proceedings does not mean that he did not show the required degree of diligence.

51. In consideration of the above, the Appellant submitted the following requests for relief:

“(i) Upholding the present Appeal;

(ii) Setting aside the Decision under Appeal;

(iii) Replacing the Decision under Appeal with an award ordering that: - PFC CSKA-Sofia is found guilty of failing to comply in full with the decision passed by the FIFA DRC on 21 May 2015 in the proceedings

between Mr. Youness Bengelloun and PFC CSKA Sofia - PFC CSKA-Sofia has breached Article 15 of the FIFA Disciplinary Code (2019 ed.) or Article 64 of the FIFA Disciplinary Code (2017 ed.);

(iv) imposing to PFC CSKA-Sofia the sanction(-s) it deems appropriate under Article 15 of the FIFA Disciplinary Code (2019 ed.) or Article 64 of the FIFA Disciplinary Code (2017 ed.);

(v) in alternative to the prayers for relief (iii) and (iv) above, referring the present case back to the FIFA Disciplinary Committee for a new decision, in light of the grounds of the CAS Award;

(vi) in any event, ordering that FIFA and/or PFC CSKA-Sofia shall bear all arbitration costs incurred with the present proceedings and cover all costs incurred by Mr. Youness Bengelloun in relation with the present proceedings, including legal fees”.

52. The First Respondent’s submissions, in essence, may be summarised as follows:

- It is evident that by being aware of the existence of the Original Club’s insolvency proceedings in Bulgaria as from 2 September 2015 and not seeking to register his claim in accordance with the applicable domestic law, the Appellant contributed to the successor CSKA’s breach of Article 64 FDC, as he did not enable the payment of his debt through the insolvency proceedings despite having been able to do so at all times. Moreover, by having been informed about the existence of the insolvency proceedings in Bulgaria, the purpose of the provision of the EU Insolvency Regulations relied upon by the Appellant was already fulfilled and hence any reliance on such regulation is moot. The Appellant further openly admits that he was exclusively relying on the information that FIFA may have received in the context of other proceedings. In arguing this, the Player has desperately attempted to shift his negligent conduct towards other stakeholders instead of demonstrating that he diligently contacted (or at least sought to contact) the insolvency administrator. No proof of any participation in the insolvency proceedings has been produced, and yet the Appellant expected the Committee and now the Panel to turn a blind eye towards his inaction and towards a CAS award that dealt with –and resolved– an almost identical situation: CAS 2011/A/2646.

- In the Appealed Decision, in line with the criteria previously followed by the CAS in cases of sporting succession, and in light of the evidence on file, the FIFA DC rightfully concluded that “there is no other alternative but to conclude that the new Club, PFC CSKA-Sofia, is to be regarded as the sporting successor of the original Debtor, PFC CSKA Sofia”.

- As to the Appellant’s diligence, it has to be recalled that the Appellant had learned of the existence of the insolvency proceedings as a result of FIFA’s letter of 2 September 2015 (i.e. before the Sofia court’s decision to initiate insolvency proceedings on 2 October 2015) and, despite this, he never took any action to register his claim and defend his rights in accordance with Bulgarian insolvency law. In line with the award CAS 2011/A/2646, the Appellant was expected to contribute “to remove the prerequisite leading to the sanction imposed on the Decision: the lack of payment of the debt ordered in the FIFA DRC decision”. By not taking any measures to ensure that his credit was being duly communicated to the Bulgarian authorities, he did not fulfil his expected conduct. With respect to the nature of the debt

– i.e. outstanding salaries and compensation for breach of contract –, the Appellant has failed to prove that claims for breach of employment agreement are not “recoverable” in Bulgarian bankruptcy proceedings.

53. Based on the foregoing, the First Respondent submitted the following requests for relief:

“(a) Rejecting the appeal on the merits;

(b) Confirming the Appealed Decision;

(c) Ordering the Appellant to bear the full costs of these arbitration proceedings”.

54. In turn, the Second Respondent’s submissions, in essence, may by summarised as follows:

- PFC CSKA-Sofia is not the successor of CSKA, but of another team, Litex Lovech, whose legal and financial obligations were duly paid by PFC CSKA-Sofia. In particular, on 27 May 2016, all the shares in “PFC Litex Lovech AD” were transferred from “Litex Commerce AD” (the respective parent company) to “PFC CSKA 1948-AD”. This change in ownership was reflected in the Commercial Register on 2 June 2016. Following this transaction, the new owners changed the name of the company from “PFC Litex Lovech AD” to “PFC CSKA-Sofia EAD” and acquired the license and players from Litex Lovech. As a result, not only the legal entity, but also the football team of CSKA is different than PFC CSKA-Sofia. All this was confirmed by the BFU.

- PFC CSKA-Sofia acquired the assets in the bankruptcy estate of CSKA by paying the highest bid (approximately 4 million Euros), thanks to which all football players, coaches, and staff members of CSKA were or will be fully compensated for their registered and accepted claims listed in the bankruptcy.

- The conclusion of the Appealed Decision that PFC CSKA-Sofia is the sporting successor of CSKA is flawed, as PFC CSKA-Sofia is the sporting successor of Litex Lovech and there are no links between PFC CSKA-Sofia and CSKA. Should PFC CSKA-Sofia be considered as a successor of CSKA as well, this would mean that it would have to pay (in addition to the 4 million Euros already paid into the bankruptcy assets) the debts of CSKA not listed in the bankruptcy list.

- The concept of sporting succession was introduced by the CAS to prevent abuses. In all CAS cases submitted, the old (debtor) club remained affiliated with the same federative rights (license and/or TMS accounts); the “new club” operated with the same management, players and staff; the “new club” took over the position of the “old club” in the championship without any gap in-between; no proper bankruptcy proceedings were conducted, either because it did not concern the bankruptcy of the “old club” or of an “old entity” or because it did not matter to the case. However, none of this is the case here. In addition, had FIFA intended to include cases involving bankruptcy proceedings into the concept of sporting succession, it should have stated so expressly in the provision of Article 15 (4) of the FDC, which codified the sporting successor case-law. Furthermore,

PFC CSKA-Sofia did not act fraudulently: it paid more than double what was necessary to cover all debts towards privileged creditors of CSKA, it acquired its assets through a public tender and it was transparent with FIFA since the very beginning. By applying the principles set out in CAS 2011/A/2646, PFC CSKA-Sofia cannot be considered as the “sporting successor” of CSKA

- In cases of a bankrupt and disaffiliated club, FIFA traditionally states that it is no longer in any position to intervene in the enforcement of claims against the bankrupt entity. Otherwise, the equal treatment of all creditors, which is established under Bulgarian law, would be jeopardized. The national bankruptcy proceedings are still ongoing and the competent Court of Sofia as well as the appointed trustees remain exclusively competent. BGN 8,000,000 are momentarily being distributed and all registered and accepted claims of staff, coaches and players of CSKA in the total amount of BGN 3,053,630.47 will be compensated in full. As of July 2020, 95% of the creditors have applied for payment and have been paid. Consequently, the original debtor, CSKA in liquidation, is still able to fulfil its financial obligations towards its employees. Thus, the only thing CSKA cannot do is to comply with any possible decision passed by the FIFA DC on the basis of Article 15 of the FDC (2019 ed.) / Article 64 FDC (2017 ed.), as it is up to the Sofia City Court to decide as to when the creditors will be satisfied.

- As to the Appellant’s legal actions in the context of the bankruptcy proceedings, it seems that he has been included in the initial list of creditors ex officio without him filing any claim. The Appellant therefore never pro-actively introduced the relevant FIFA decision, translated into Bulgarian, for review of the bankruptcy trustee. The bankruptcy trustee declared that she had reviewed all the documentation of CSKA, and in accordance with Bulgarian law, determined the existence of valid claims. Only where the trustee established a party to have the quality of a creditor, that party was inserted in the final list of the creditors. More importantly, the Appellant never actively filed any claim within the applicable deadlines. This has been confirmed by the bankruptcy trustee. He never showed the diligence that any creditor should demonstrate in the context of bankruptcy proceedings, although he had in his possession all the relevant information through FIFA correspondence and through his legal representative who was aware of all the relevant information on 13 October 2015, i.e. before the first summons of creditors took place.

- Other than what the Appellant implies, credits arising out of claims for breach of an employment agreement are recoverable in Bulgarian bankruptcy proceedings. There are crucial differences between the cases of other Players quoted by the Appellant. Mr. Sprockel for instance did not provide enough evidence for his case and that is why his claim was not admitted in full, whereas in the cases of Bernardo Tengarrinha and Nilson Barros the creditors did not exhaust all legal remedies and did not file a separate claim requesting their compensation in full to be heard by an appeal court.

- With respect to the CAS 2019/A/6461 case and the Appellant’s comments thereon, none of the elements justifying the sporting succession are present in this matter and, in particular, “the right to compete of Second Respondent is not connected to the bankruptcy of CSKA at all”. It further claims that the award in CAS 2019/A/6461 supports its argument that

proper bankruptcy proceedings should prevent the application of the FDC and that it confirms the need for creditors to be diligent in recovering their claim, in order for them to be able to validly request the imposition of disciplinary sanctions upon the debtor’s successor. The only reason the Panel in CAS 2019/A/6461 allowed the sanctioning of the new club there, was that the FIFA DRC decision had been rendered after the bankruptcy of the old club and, as a result, the creditor was in fact unable to undertake any actions to recover his claim in the course of the bankruptcy proceedings.

55. In consideration of the above, the Second Respondent submitted the following requests for relief:

“Prayer 1: The Appeal shall be rejected and the decision of the FIFA Disciplinary Committee shall be confirmed in its entirety.

Prayer 2: Mr. Youness Bengelloun shall be ordered to bear the costs of the arbitration and he shall be ordered to contribute to the legal fees incurred by Second Respondent at an amount of at least CHF 20,000”.