Delfino Pescara 1936 v. Fédération Internationale de Football Association (FIFA), Royal Standard Liège

II. FACTUAL BACKGROUND

4. Below is a summary of the relevant facts and allegations based on the Parties’ written submissions, pleadings and evidence adduced during these proceedings. Additional facts and allegations 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, he refers in his Award only to the submissions and evidence he considers necessary to explain his reasoning.

5. By virtue of winning the Serie B title during the 2011/12 season, Pescara was promoted to Serie A for the 2012/13 season.

6. On 10 July 2012, Pescara and Standard Liège entered into a transfer agreement (hereinafter referred to as “the Agreement”) for the temporary transfer of B. (hereinafter referred to as “the Player”) from Standard Liège to Pescara.

7. Under Clause C of the Agreement, the Player would be loaned to Pescara from 10 July 2012 until 30 June 2013.

8. Under Clause 1.3 of the Agreement, Pescara agreed to pay Standard Liège a loan fee of EUR 300,000, payable in two EUR 150,000 instalments. This amount was paid by Pescara in accordance with the fee schedule set out in Clause 1.3.

9. Clause 2.1 of the Agreement provided as follows:

“The Parties and the player agree that Club B shall be granted an option for the purchase of the Player at the following terms and conditions: The option shall be exercisable by Club B until June 15, 2013 at latest by giving Club A written notice by fax: 0032 42521469. The option shall be granted for the purchase of the Player at a NET amount of 900.000 (Nine hundred thousand/00) Euros including Taxes (“Transfer fee”): the right of Club B shall exist only and at the extent that the consideration of 900.000 (Nine hundred Thousand/00) Euros, including Taxes is offered by Club B in the notice of the exercise of the option, to be paid as it follows:

• Euro 450.000,00 within and no later than 30/09/2013;

• Euro 450.000,00 within and no later than 30/09/2014”.

10. The Sole Arbitrator notes that, under the Agreement, Pescara was defined as “Club B” in Clause 1, Standard Liège was defined as “Club A” in Clause 2 and the Player was defined as the “Player” in Clause 3. Furthermore, Clause 2.3 of the Agreement stated that in case of late payment of the definitive transfer fee, an interest rate of 10% would apply over the outstanding amounts from the due date until the effective date of payment.

11. On 5 May 2013, Pescara, being mathematically unable to accumulate enough points to avoid being relegated from Serie A, was aware that they would be competing in Serie B during the 2013/14 season.

12. On 6 June 2013, Pescara exercised the option clause to complete the transfer for the Player on a permanent basis.

13. On 7 August 2013, Pescara sent a letter to Standard Liège requesting to amend the payment schedule stated in the Agreement. In lieu of the EUR 450,000 due no later than 30 September 2013, Pescara requested to pay five equal instalments of EUR 90,000 on 30 September 2013, 30 November 2013, 31 January 2014, 31 March 2014 and 31 May 2014. The EUR 450,000 due by 30 September 2014 remained in place. Standard Liège agreed to these new terms.

14. On 30 September 2013, Pescara paid the first instalment of EUR 90,000 under the restructured payment schedule.

15. On 30 November 2013, Pescara paid the second instalment of EUR 90,000 under the restructured payment schedule. As a result, EUR 720,000 remained unpaid by Pescara.

16. On 21 January 2014, Pescara agreed to buy the player H. from his former club, HSK Zrinjski Mostar, for a transfer fee of up to EUR 200,000 payable as follows:

“- € 50,000 (fifty thousand Euro) by 31 March 2014;

• € 50,000 (fifty thousand Euro) by 30 June 2014;

• € 50,000 (fifty thousand Euro) by 30 August 2014”.

An additional EUR 50,000 would be due to HSK Zrinjski Mostar once H. had played in ten official matches for Pescara.

17. On 31 January 2014, Pescara failed to pay to Standard Liège the third instalment of EUR 90,000 due under the restructured payment schedule.

18. On 31 March 2014, Pescara failed to pay to Standard Liège the fourth instalment of EUR 90,000 due under the restructured payment schedule.

19. On 31 May 2014, Pescara failed to pay to Standard Liège the fifth instalment of EUR 90,000 due under the restructured payment schedule.

20. On 31 July 2014, Pescara agreed to buy the player M. from his former club, Crewe Alexandra, for a transfer fee of up to GBP 105,000 payable as follows:

“- GBP 65.000,00 (sixth five thousand pounds), (solidarity mechanism included) upon transfer of the Player to Pescara.

• GBP 10.000,00 (ten thousand pounds), once the Player will have played 10 matches with Pescara’s first team in official Italian League Competition and if the Player has played each of those matches for minimum 45 minutes.

• GBP 15.000,00 (fifteen thousand pounds), once the Player will have played 20 matches with Pescara’s first team in official Italian League Competition and if the Player has played each of those matches for minimum 45 minutes.

• GBP 15.000,00 (fifteen thousand pounds), once the Player will have played 30 matches with Pescara’s first team in official Italian League Competition and if the Player has played each of those matches for minimum 45 minutes”.

21. On 30 September 2014, Pescara failed to pay to Standard Liège the EUR 450,000 due under both the original and restructured payment schedule.

22. On 7 January 2015, Pescara agreed to buy the player S. from his former club, Nk Novigrad, for a transfer fee of EUR 100,000 payable in two equal instalments on 30 September 2015 and 30 April 2016.

23. On 3 July 2015, Standard Liège notified Pescara, via e-mail, that they were still awaiting payment of the outstanding EUR 720,000, and warned that “if payment is not done for the 10th of July, we send a claim to the UEFA”.

24. On 7 July 2015, Pescara responded to Standard Liège’s e-mail with an attached letter dated 3 July 2015, requesting to once again amend the repayment schedule. The letter stated, inter alia, that Pescara “has encountered substantial financial difficulties since the relegation of the club from the Italian Serie A. Our club is therefore unable to make the payment of the outstanding transfer fee at the present time”. Pescara also proposed to Standard Liège that after deducting EUR 45,000 as the amount payable to the Player’s former clubs as solidarity payments, the amount owed to Standard Liège was EUR 675,000.

25. Pescara requested the following repayment schedule:

26. On 8 July 2015, Pescara sold the Player to FC Basel for a transfer fee of EUR 1m payable in full no later than three days from the release of the international transfer certificate by the FIGC.

27. On 9 July 2015, Standard Liège responded to Pescara via e-mail, stating inter alia, that they declined to accept Pescara’s amended repayment schedule, but that they would agree to amend the repayment schedule to the following:

Pescara did not respond to this e-mail.

28. On 14 July 2015, Pescara agreed to buy the player A. from his former club, FC Viitorul, for a transfer fee of EUR 300,000 payable as follows:

“- EUR 75.000 (seventy five thousand euro) payable within 15 days from the registration of the Player with Delfino Pescara; - EUR 75.000 (seventy five thousand euro) payable within and no later than 30 September 2015;

• EUR 75.000 (seventy five thousand euro) payable within and no later than 31 July 2016;

• EUR 75.000 (seventy five thousand euro) payable within and no later than 30 September 2016”.

29. On 1 September 2015, Standard Liège put Pescara in default of payment of the EUR 675,000 balance and set a time limit expiring on 16 September 2015 in order to remedy the default. Pescara did not make any payments following the default notice.

Proceedings before FIFA

30. On 24 September 2015, Standard Liège filed a statement of claim before the FIFA Players’ Status Committee (“the FIFA PSC”), requesting that Pescara be ordered to pay overdue payables in the amount of EUR 675,000 plus interest of 10% p.a. as from the due dates until effective payment, as per the Agreement.

31. On 14 October 2015, the FIFA PSC wrote to the FIGC informing them of Standard Liège’s claim against Pescara. The FIFA PSC invited Pescara to either proceed with the remittance of the alleged overdue payables to Standard Liège, or respond to the claim made by Standard Liège. The letter stated, inter alia, the following:

“From the enclosed statement of claim, it can be noted, inter alia, that according to Royal Standard de Liège, Delfino Pescara 1936 has overdue payables towards it. … In this sense, we kindly refer Delfino Pescara 1936 to art. 12bis of the Regulations on the Status and Transfer of Players, in accordance with which 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 transfer agreements. In addition, any club found to have delayed a due payment for more than 30 days without a prima facie contractual basis may be sanctioned by the competent deciding bodies of FIFA”.

32. On 19 October 2015, Pescara received from the FIGC the aforementioned communication from FIFA. However, Pescara did not proceed with the remittance of the alleged overdue payables, nor did it respond to the claim made by Standard Liège.

33. On 17 November 2015, the FIFA PSC wrote to Standard Liège and the FIGC informing them that the investigation phase of the matter has been closed, and that the matter would be submitted to the Single Judge of the FIFA PSC within the next 5 to 7 days. Pescara received this communication from the FIGC on the same day.

34. On 24 November 2015, the FIFA PSC rendered a decision (“the Appealed Decision”) as follows:

“1. The claim of the Claimant, Royal Standard de Liège, is accepted. 2. The Respondent, Delfino Pescara Calcio 1936, 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 675,000, plus interest at the rate of 10% p.a. until the date of effective payment as follows:

• on the amount of EUR 90,000 as of 1 February 2014,

• on the amount of EUR 90,000 as of 1 April 2014,

• on the amount of EUR 90,000 as of 1 June 2014, and

• on the amount of EUR 405,000 as of 1 October 2014. 3. If the aforementioned amount plus interest 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. The Respondent is ordered to pay a fine in the amount of CHF 50,000. The fine is to be paid within 30 days of notification of the present decision to FIFA to the following bank account ….

5. The final amount of costs of the proceedings in the amount of CHF 25,000 is to be paid by the Respondent, within 30 days as from the notification of the present decision, as follows:

a) The amount of CHF 5,000 by the Respondent to the Claimant. b) The amount of CHF 20,000 to FIFA to above mentioned bank account of FIFA ….

6. The Claimant is directed to inform the Respondent immediately and directly of the account number to which the remittances under point 2. and 5.a) are to be made and to notify the Single Judge of every payment received”.

35. On 18 December 2015, FIFA wrote to Standard Liège and the FIGC notifying them of the Appealed Decision.

36. On 19 December 2015, the FIGC notified Pescara of the Appealed Decision.

III. PROCEEDINGS BEFORE THE COURT OF ARBITRATION FOR SPORT

37. On 8 January 2016, pursuant to Article R47 and Article R48 of the Code of Sports-related Arbitration (“the CAS Code”), Pescara filed a Statement of Appeal against Standard Liège and FIFA at the Court of Arbitration for Sport (“the CAS”). The Statement of Appeal contained the following requests for relief:

“1. Declare the present appeal admissible. 2. Set aside the decision of the Single Judge of the FIFA Players’ Status Committee under appeal. 3. Decide that Appellant has never been charged with the disciplinary violations for which it has been punished. 4. Decide that no punishment may be imposed on Appellant on the basis of the proceeding before the Single Judge of the FIFA Players’ Status Committee. 5. Decide that the Article 12bis of the FIFA Regulations on the Status and Transfer of Players may not be applied retroactively.

6. Annul the sanction imposed on Delfino Pescara 1936 by the Single Judge of the FIFA Players’ Status Committee. 7. Alternatively, decide that the sanction imposed by the Single Judge of the FIFA Players’ Status Committee is excessive and reduce the sanction to a warning. 8. Decide that no party to the proceeding before the Single Judge of the FIFA Players’ Status Committee has requested the grounds of the decision to be issued. 9. Decide that the procedural costs indicated in the decision of the Single Judge of the FIFA Players’ Status Committee are not payable. 10. Alternatively, decide that the procedural costs indicated in the decision of the Single Judge of the FIFA Players’ Status Committee are excessive and must be reduced. 11. Award any further relief to Appellant as the Panel deems fit. 12. Decide that the Respondents must bear all the costs of the present arbitration. 13. Decide that the Respondents must make a contribution towards the legal costs of Appellant incurred in the present proceedings”.

38. In its Statement of Appeal, Pescara listed both Standard Liège and FIFA as Respondents, but stated the following:

“15. The Decision under Appeal in reality contains two separate decisions. The first decision concerns the contractual matter between Pescara and Standard, whereas the second concerns a fine imposed by FIFA on Pescara for a breach of the rules of FIFA. 16. Delfino Pescara 1936 is minded to appeal exclusively against the decision of FIFA concerning the amounts ordered payable to by Appellant to FIFA. Appellant therefore considers that the matter is an appeal against a decision issued by an international federation in a disciplinary matter as intended in Article R65 of the CAS Code. The proceeding shall therefore be free in accordance with Article R65.2 of the CAS Code”.

39. On 21 January 2016, pursuant to Article R51 of the CAS Code, Pescara filed its Appeal Brief with the CAS Court Office, reiterating all the requests for relief contained in the Statement of Appeal plus an additional request for relief as follows:

“6. Decide that the sanction imposed on Delfino Pescara 1936 by the Single Judge of the FIFA Players’ Status Committee is unreasonable”.

40. On 22 January 2016, Standard Liège requested to be removed as a party from this matter, citing a lack of legal interest in the proceedings and Pescara’s assertion that it is minded to “appeal exclusively against the decision of FIFA concerning the amounts ordered to be paid by Pescara to FIFA”.

41. On 22 January 2016, the CAS Court Office wrote to the Parties informing them that it is not for the CAS Court Office to make any decision on the quality of the Parties. As Pescara listed Standard Liège as the First Respondent, the CAS Court Office would proceed with the arbitration on this basis.

42. On 27 January 2016, Pescara wrote to the CAS Court Office stating that it “is only appealing against the decision of FIFA concerning the amounts ordered payable to FIFA by FIFA”, and “would have no issue with Standard remaining entirely passive in the arbitration”.

43. On 28 January 2016, Standard Liège requested once again to be removed as a party from this matter once the Panel was duly constituted.

44. On 28 January 2016, the CAS Court Office wrote to the Parties informing them that the issue of the standing to be sued of Standard Liège shall be addressed once the Panel was constituted.

45. On 3 February 2016, Pescara wrote to the CAS Court Office stating that it preferred to have this matter heard by a Sole Arbitrator.

46. On 4 February 2016, Standard Liège wrote to the CAS Court Office stating that it agreed to have this matter heard by a Sole Arbitrator.

47. On 11 February 2016, FIFA wrote to the CAS Court Office stating that it preferred to have this matter heard by a Panel of three arbitrators.

48. On 19 February 2016, the CAS Court Office wrote to the Parties informing them that, pursuant to Article R50 of the CAS Code, the President of the CAS Appeals Arbitration Division decided to submit the present matter to a Sole Arbitrator.

49. On 9 March 2016, the CAS Court Office wrote to the Parties informing them that Mark A. Hovell, Solicitor, Manchester, United Kingdom was appointed as the Sole Arbitrator in this matter.

50. On 11 March 2016, the CAS Court Office wrote to the Parties informing them that, since Pescara did not expressly agree to exclude Standard Liège from these proceedings, that Standard Liège would remain a party to this matter.

51. On 29 March 2016, pursuant to Article R55 of the CAS Code, Standard Liège filed its Answer containing the following requests for relief:

“IN PRINCIPAL ORDER – to confirm the Decision under Appeal in its entirety; – to order the Appellant to pay all costs of the arbitration procedure; – to order the Appellant to pay a substantial contribution towards the legal costs incurred by the First Respondent; – to award any other relief to the First Respondent as the Sole Arbitrator deems fit;

IN SUBSIDIARY ORDER – to confirm the Decision under Appeal insofar as it relates to

o the overdue payables in the amount of EUR 675.000,00, plus interest at the rate of 10 percent per annum (paragraph III.2 of the Decision under Appeal); and o the costs of the FIFA proceedings to be paid by the Appellant to the First Respondent (paragraph III.5.a of the Decision under Appeal); – to order the Appellant and the Second Respondent to pay all costs of the arbitration procedure; – to order the Appellant to pay a substantial contribution towards the legal costs incurred by the First Respondent; – to award any other relief to the First Respondent as the Sole Arbitrator deems fit”.

52. On 1 April 2016, pursuant to Article R55 of the CAS Code, FIFA filed its Answer containing the following requests for relief:

“1. In light of the above considerations, we insist that the decision passed by the Single Judge is fully justified. We therefore request that the present appeal be rejected and the decision taken by the Single Judge on 24 November 2015 be confirmed in its entirety. 2. Furthermore, all costs related to the present procedure as well as the legal expenses of FIFA shall be borne by the Appellant”.

53. On 4 April 2016, the CAS Court Office wrote to the Parties inviting them to inform the CAS Court Office whether they preferred a hearing to be held in this matter or whether they wished for the Sole Arbitrator to issue an award based solely on the Parties’ written submissions.

54. On 7 April 2016, Pescara wrote to the CAS Court Office requesting that the Sole Arbitrator permit them to file additional written submissions and to extend the time limit for expressing an opinion on whether they preferred a hearing to be held in this matter.

55. On 11 April 2016, FIFA wrote to the CAS Court Office stating that it did not deem a hearing to be necessary and wished for the Sole Arbitrator to render an award solely on the written submissions.

56. On 11 April 2016, the CAS Court Office wrote to the Parties inviting them to inform the CAS Court Office whether they would agree to a further round of submissions as requested by Pescara. The CAS Court Office also extended the time limit for expressing an opinion on whether they preferred a hearing to be held in this matter until 15 April 2016.

57. On 14 April 2016, FIFA wrote to the CAS Court Office stating that it did not agree to a further round of submissions.

58. On 14 April 2016, Standard Liège wrote to the CAS Court Office stating that it did not agree to a further round of submissions.

59. On 15 April 2016, the CAS Court Office wrote to the Parties on behalf of the Sole Arbitrator inviting the Parties to answer the following questions in the hope that, upon receipt of the

answers, the Sole Arbitrator would be sufficiently well-informed to deal with this matter on the papers, should Pescara join the other Parties and decide that a hearing is unnecessary:

“1. What is the relevance to the sanction issued by the Second Respondent of the Appellant’s transfer activity from 2012? 2. What other cases has FIFA dealt with to date concerning Article 12bis and can copies of the decisions be provided? 3. Is there some form of tariff that the Second Respondent refers to when issuing sanctions? 4. At para 19 of the Decision is a reference to ‘repeated offence[s]’ – has the Appellant been sanctioned before in relation to Article 12bis? If so, please provide the details”.

60. On 19 April 2016, Pescara wrote to the CAS Court Office, inter alia, reiterating its request for a full and unlimited second round of written submissions.

61. On 21 April 2016, the CAS Court Office wrote to the Parties, informing them that the Sole Arbitrator denied Pescara’s request for a further round of submissions. On the same day, Standard Liège wrote to the CAS Court Office declining the opportunity to answer the questions put forth by the Sole Arbitrator.

62. On 2 May 2016, both Pescara and FIFA wrote to the CAS Court Office with their responses to the questions put forth by the Sole Arbitrator.

63. On 10 May 2016, Pescara wrote to the CAS Court Office with additional unsolicited submissions.

64. On 12 May 2016, the CAS Court Office wrote to the Parties informing them that based on the two rounds of written submissions to date, the Sole Arbitrator deemed himself sufficiently informed to render an award on the written submissions alone, without a hearing, in accordance with Article R44.2 of the CAS Code. Accordingly, no hearing would be held in this matter.

65. On 13 May 2016, FIFA wrote to the CAS Court Office requesting that Pescara’s submission dated 10 May 2016 be declared inadmissible.

66. On 17 May 2016, the CAS Court Office wrote to the Parties informing them that the Sole Arbitrator had deemed Pescara’s unsolicited submission dated 10 May 2016 as inadmissible.

67. On 19 May 2016, Standard Liège filed a signed Order of Procedure with the CAS Court Office.

68. On 25 May 2016, Pescara wrote to the CAS Court Office stating that it refused to sign the Order of Procedure, as it submitted that its right to be heard had not been respected. On the same day, FIFA filed a signed Order of Procedure with the CAS Court Office.

69. On 29 June 2016, Pescara wrote to the CAS Court Office stating that it had discharged the majority of the sums due to Standard Liège.

IV. SUBMISSIONS OF THE PARTIES

70. The following summary of the Parties’ positions is illustrative only and does not necessarily comprise each and every contention put forward by the Parties. The Sole Arbitrator however, has carefully considered all the submissions made and evidence advanced by the Parties, even if no explicit reference is made in what immediately follows.

A. Pescara’s Submissions

In summary, Pescara submitted the following in support of its Appeal:

i. Right to be heard on Article 12bis FIFA RSTP

71. Pescara submitted that prior to the case being heard by the FIFA PSC, it was not presented with a charge for violating Article 12bis of the FIFA Regulations on the Status and Transfer of Players (the “FIFA RSTP”), nor was it informed by FIFA of an investigation into possible violations of Article 12bis, nor was it informed by FIFA of the possibility that it could face sanctions arising out of any charge or investigation.

72. Pescara acknowledged that, on 19 October 2015, it received a document sent by FIFA to the FICG on 14 October 2015. This letter made a reference to Article 12bis. However, Pescara submitted that this document did not constitute proper notice of an alleged violation of Article 12bis and the subsequent proceedings at the FIFA PSC.

73. While the document made reference to Article 12bis, Pescara submitted that it was a passing general reference and insufficient to give Pescara any reason to believe that a sanction could be imposed without further notice.

74. Pescara also quoted CAS 2012/A/2740, which stated:

“78. Indeed, the right to be heard is a fundamental right and one of the most important elements of the right to a due process that must be respected in the course of the proceedings in front of any judicial body. A party to any such proceedings has the right of defending itself and shall have the chance to state its case and to provide its position regarding the subject matter in question, as well as to provide evidences that it may deem relevant for the case”.

75. FIFA did not properly notify Pescara of the proceedings before the FIFA PSC, and therefore, Pescara was “therefore never afforded the chance to react in any way to an alleged violation, let alone present a reasoned defence against an explicit charge identifying a perceived disciplinary violation under investigation by the deciding body”. As a result, FIFA violated Pescara’s right to be heard.

76. Pescara also submitted that a de novo review would not rectify the fundamental violation of their right to be heard. While CAS jurisprudence has, from time to time, recognised that a de novo review could cure some violations of the right to be heard by a sports governing body, these instances are rare and exceptional (as established in CAS 2010/A/2275) and would not suffice in the present proceedings.

77. To grant a de novo review in this case, where Pescara was not heard at all in reference to the Appealed Decision, would effectively remove the obligation of sport federations to respect the right to be heard, and therefore set a dangerous precedent.

78. Accordingly, for all the reasons above, Pescara stated that the Appealed Decision should be set aside.

ii. Retroactive application of Article 12bis FIFA RSTP

79. Pescara submitted that FIFA applied Article 12bis retroactively, in violation of Article 4 of the FIFA Disciplinary Code and the fundamental principle of non-retroactivity.

80. The Agreement between Pescara and Standard Liège for the Player was entered into on 10 July 2012, while Article 12bis did not take effect until April 2015. When undertaking its financial obligations towards Standard Liège under the Agreement in July 2012, Pescara had no means for which to take into consideration the fact that Article 12bis would be enacted nearly three years later.

81. Pescara also quoted CAS 2008/A/2583-1584, which stated, in relevant part:

“43. As regards the principle of non-retroactivity, the Second Respondent is correct to the extent that this is a fundamental legal principle, which does – basically – apply to measures taken by associations having the character of a sanction”.

82. Pescara also cited the principle nullum crimen sine lege, nulla poena sine lege, arguing that this prohibited punishments based on retroactive laws or rules of law. As the sanction upon Pescara was imposed retroactively in violation of Article 4 of the FIFA Disciplinary Code as well as the fundamental principle on non-retroactivity, it must therefore be set aside.

iii. Unreasonableness of the sanctions

83. Even if the Sole Arbitrator were to rule the principle of non-retroactivity does not apply to the present case, Pescara argued that “it would be completely unreasonable to sanction Appellant on the basis of commitments undertaken well before Article 12bis of the FIFA Regulations came into existence”.

84. Pescara argued that “[a] football club cannot simply decide that it will no longer be in financial difficulties when an international football federation changes its rules” and further, that “there was absolutely nothing Pescara could have done to change the commitments undertaken by the club in the past or the financial situation of the club that resulted from the earlier chain of events”. As such, Pescara submitted that as there was no way for it to consider Article 12bis when making financial commitments prior to its announcement or enactment, it could not therefore seek to ensure compliance with a regulation that did not yet exist.

iv. Proportionality of the sanctions

85. In the event that the Sole Arbitrator decided that a sanction may be imposed, Pescara submitted that the fine imposed upon Pescara by the FIFA PSC is disproportionate and excessive under the circumstances.

86. Pescara notes the four types of sanctions listed under Article 12bis (4):

“a) a warning; b) a reprimand; c) a fine; d) a ban from registering any new players, either nationally or internationally, for one or two entire and consecutive registration periods”.

87. As it was fined, Pescara received the second most severe sanction available for a violation of Article 12bis. The Appealed Decision contained no mention as to why the FIFA PSC elected to fine Pescara, rather than issue a reprimand or warning.

88. The fine was disproportionate because there were lesser sanctions available to the FIFA PSC, and because any violation would have been the first such violation Pescara had faced under Article 12bis. Additionally, Pescara freely admitted the amounts due to Standard Liège and attempted to reach an amicable solution with Standard Liège in this matter. As such, there were no aggravating factors, nor was there any reason for the FIFA PSC to forgo the first two sanctions for a first-time offender.

89. Accordingly, for all of the reasons above, Pescara requested that the Sole Arbitrator reduce the sanction from a fine to a warning.

v. Costs of the proceedings

90. Pescara submitted that FIFA’s imposition of CHF 25,000 in procedural costs arising out of the proceedings before the FIFA PSC were applied to Pescara in violation of Article 18(3) of the FIFA Procedural Rules, which states the following:

“3. No fees shall be charged if a party decides not to ask for the grounds of a decision once the findings have been communicated”.

91. Neither Pescara nor Standard Liège requested that FIFA provide the grounds of the decision before the FIFA PSC. Rather, FIFA sent the grounds of the decision to both Parties unprompted and of its own volition. As such, pursuant to Article 18(3), Pescara cannot be charged fees, and the procedural costs were issued in error by FIFA.

92. Accordingly, for all of the reasons above, Pescara requested the Sole Arbitrator to confirm that no procedural costs are payable.

vi. Costs of FIFA were excessive

93. Pescara submitted that FIFA’s imposition of CHF 25,000 in procedural costs arising out of the proceedings before the FIFA PSC were excessive.

94. According to Article 18(1) of the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber (the “Procedural Rules”), the maximum amount of procedural costs allowable is CHF 25,000. FIFA therefore imposed the maximum amount in the proceedings before the FIFA PSC, despite the decision-making body consisting of just one person, when proceedings before the FIFA PSC routinely involve up to thirteen judges. Additionally, FIFA sent just two pieces of correspondence to the proceedings and Pescara didn’t submit a defence, so the work involved and time spent by FIFA did not justify imposing the maximum allowable procedural costs and was “blatantly excessive under any standard of review”.

95. Accordingly, for all of the reasons above, Pescara requested that, in the event the Sole Arbitrator orders Pescara to pay procedural costs, the Sole Arbitrator reduces the amount of procedural costs to a level proportionate to the amount of work undertaken by FIFA in the proceedings before the FIFA PSC.

vii. Pescara’s answers to the questions posed by the Sole Arbitrator

In summary, Pescara submitted the following responses to the Sole Arbitrator’s questions:

a. What is the relevance to the sanction issued by the Second Respondent of the Appellant’s transfer activity from 2012?

96. Pescara contended that FIFA used the Transfer Matching System to review Pescara’s transfer activity and then used this information to determine whether to impose a sanction and decide upon the severity of the sanction. Pescara submitted that it was illogical that FIFA would submit information regarding Pescara’s 2012 transfer activity as evidence to the Sole Arbitrator if it did rely upon this information in imposing its sanction. If FIFA did not use the information regarding Pescara’s 2012 transfer activity as the basis for its decision to sanction Pescara, then FIFA would not have had any grounds whatsoever to defend the sanction imposed by the FIFA PSC.

97. Further, FIFA’s review of Pescara’s transfer activity was incomplete. The review only considered international transfer activity and failed to take into account domestic transfer activity.

98. FIFA’s review of Pescara’s transfer activity was also misguided, in that FIFA apparently considered that Pescara selling players and buying new players would be a reasonable basis to impose a sanction. Football clubs must engage in the buying and selling of players as a fundamental part of running a football club. Its transfer activity was necessary to both remain competitive so as to avoid being relegated further down the Italian football pyramid. Additionally, the transfer activity, for which Pescara earned a profit, helped rectify the club’s

financial difficulties, allowing it to avoid insolvency as well as taking steps towards settling the few remaining overdue payables.

99. Pescara also reiterated its argument in its Appeal Brief that its right to be heard had been violated as it was not given the opportunity to defend itself against the charges of Article 12bis. Had it been given the opportunity to do so, it could have provided FIFA with proof of its successful efforts to remedy their difficult financial situation. Despite this, there were still no grounds for FIFA to consider any aggravating circumstances based on Pescara’s transfer activities in any event.

b. What other cases has FIFA dealt with to date concerning Article 12bis and can copies of the decisions be provided?

100. Pescara submitted that it was not aware of FIFA having taken any decision regarding Article

c. Is there some form of tariff that the Second Respondent refers to when issuing sanctions?

101. Pescara submitted that FIFA had not published any tariffs nor has it indicated in any manner how the sanctions are to be imposed. Pescara therefore reiterated its argument in its Appeal Brief that the sanction imposed had been disproportionate to any violation Pescara might have committed under Article 12bis.

d. At para 19 of the Decision is a reference to ‘repeated offence[s]’ – has the Appellant been sanctioned before in relation to Article 12bis? If so, please provide the details.

102. Pescara submitted that it had not been sanctioned for an Article 12bis violation prior to the Appealed Decision being issued.

B. Standard Liège’s Submissions

In summary, Standard Liège submitted the following in support of its defence:

103. The overdue payables of EUR 675,000 are an uncontested debt and Pescara has never disputed this. In fact, at several times during these proceedings, Pescara had stated itself that the overdue payables in question were an uncontested debt. Further, Pescara had stated that that it was only appealing exclusively against the decision of FIFA concerning the amounts ordered payable by Pescara to FIFA, and further that the outstanding amount of EUR 675,000 had been correctly indicated as payable in the Appealed Decision.

104. Standard Liège submitted that an interest rate of 10 percent should be applied to all of the late payments by Pescara, as from the date on which these payments first became due. Pescara had not contested this either during the first instance proceedings at FIFA or at the CAS. Moreover,

in support, Standard Liège citied Article 163 of the Swiss Code of Obligations (“CO”) and Article 2.3 of the Agreement, which states, in relevant part (emphasis added by Standard Liège):

“In case of late payment of the definitive transfer fee from [Pescara], [Standard de Liège is entitled to a penalty interest of ten (10) percent on the outstanding amount from the date from which the payment was due until [Pescara] has paid the total amount due”.

105. Standard Liège submitted that all costs of the proceedings should be paid by Pescara (or in subsidiary, FIFA), and Pescara should pay a substantial contribution to the costs Standard Liège had incurred. Standard Liège submitted that it had made attempts to resolve this dispute on an amicable basis by allowing Pescara a new payment schedule. As Pescara did not adhere to the new payment schedule, Standard Liège was forced to commence legal proceedings before FIFA. Standard Liège had no legal interest in these proceedings, as Pescara had never contested the debt it owes to Standard Liège, and pointed this out to Pescara numerous times. Pescara nevertheless included Standard Liège as a party to these proceedings.

106. In support, Standard Liège cited Article 2.3 of the Agreement, which states in relevant part:

“[in] case of dispute, [Pescara] will pay all legal costs of procedure and enforcement, administrative costs and potential extrajudicial collection costs”.

107. Standard Liège elected not to respond to the questions submitted to the Parties by the Sole Arbitrator “given that the questions all relate to the sanction imposed on the Appellant by the Second Respondent and that Standard de Liège therefore cannot provide the Sole Arbitrator with any relevant and useful answer in this regard”.

C. FIFA’s Submissions

In summary, FIFA submitted the following in support of its defence:

i. The alleged violation of Pescara’s right to be heard

108. FIFA submitted that Pescara’s argument that the FIFA administration violated its right to be heard was “simply absurd” and further, that Pescara appeared to be searching for invalid arguments allowing it to further delay the payment of the amount it undeniably owed to Standard Liège.

109. FIFA’s letter to the FIGC, sent on 14 October 2015, and received by Pescara on 19 October 2015, made a clear reference to Article 12bis. In relevant part, the letter stated (emphasis added by FIFA):

“In this sense, we kindly refer [the Appellant] to art. 12bis of the Regulations on the Status and Transfer of Players, in accordance with which 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 transfer agreements. In addition, any club found to have delayed a due payment for more than 30 days without a prima facie contractual basis may be sanctioned by the competent deciding bodies of FIFA”.

110. As can be seen from the letter in question, FIFA argued that “not only was the Appellant perfectly informed about the existence and main content of art. 12bis of the Regulations, its attention was also explicitly drawn to the fact that sanctions may be imposed by the Single Judge” [emphasis added by FIFA].

111. FIFA noted that Pescara confirmed that it elected not to respond to FIFA because Pescara did not contest the claim filed by Standard Liège, and therefore had no reason to submit a defence. FIFA argued that Pescara waived its right to be heard by actively choosing not to participate in the proceedings before the FIFA PSC.

112. FIFA submitted that Pescara’s submissions relating to Article 12bis should be excluded from these proceedings in accordance with Article R57 of the CAS Code. In support, FIFA argued that Pescara’s argument and the corresponding documentation was available to Pescara during the proceedings before the FIFA PSC, and further, that Pescara “merely abuses these appeal proceedings to further delay the payment of the, undoubtedly overdue, transfer compensation to the first Respondent”.

113. FIFA submitted that should the Sole Arbitrator take Pescara’s arguments and submissions relating to Article 12bis into consideration, Pescara was duly informed that a potential violation of Article 12bis was under investigation, as evidenced by the letter FIFA sent on 14 October 2015.

114. FIFA cited the example of Article 17 of the FIFA RSTP and specifically the sporting sanction elements contained in Articles 17(3) and (4). FIFA noted that if and when sporting sanctions were potentially applicable in a matter, there is never any separate disciplinary investigation conducted by FIFA as the sporting sanctions were merely imposed in the context of the employment related dispute in question. Moreover, the letters by FIFA administration to the parties in the dispute never specifically refer to Articles 17(3) and (4) of the FIFA RSTP as every club and player should be (and normally is) well aware of the content of the FIFA RSTP and the potential consequences of acting contrary to those regulations. Accordingly, FIFA in fact went beyond what was required of them in specifically directing Pescara to Article 12bis. The fact that Pescara willingly chose not to respond to FIFA’s letters does not meant that its right to be heard was violated.

ii. The application of Article 12bis FIFA RSTP

115. FIFA noted that, pursuant to FIFA Circular No. 1468, it was made clear that Article 12bis would come into force on 1 March 2015. Applying Articles 26(1) and 26(2) of the FIFA RSTP to the proceedings at hand, any case brought to FIFA after 1 March 2015 shall be assessed according to the March 2015 edition of the FIFA RSTP. As Standard Liège’s claim against Pescara was brought on 24 September 2015, it is evident that Article 12bis applied to the contractual dispute between Pescara and Standard Liège.

116. FIFA also noted that the line of argumentation used by Pescara that they could not, in 2012, have taken into account a rule that was to be enacted 3 years later confirms the dilatory tactics being used by Pescara. FIFA stated that clubs should not need any further motivation to comply

with its financial contractual obligations and it is precisely for this reason that Article 12bis was introduced by FIFA.

117. FIFA also argued that because Pescara did not raise this argument during the proceedings before the FIFA PSC, which had the effect of Pescara accepting, without reservation, the application of Article 12bis.

iii. The alleged unreasonableness of the sanction

118. FIFA submits that, generally, financial difficulties cannot be invoked as justification for the non-payment of a transfer fee to which a party had freely committed to paying. In these proceedings specifically, FIFA argues that “every ‘compassion-argument’ that the Appellant tries to seek should immediately be dismissed as the Appellant’s current financial status is nothing more than the result of its own financial recklessness”.

119. FIFA noted that the option to purchase the Player permanently for EUR 900,000 under the Agreement could have been exercised until 15 June 2013. Pescara played its final match of the 2012/13 season on 19 May 2013 and as such, was aware on that date at the latest that it would be relegated and would have to face the inevitable financial consequences of relegation. Despite this, on 6 June 2013, i.e. three weeks after being relegated, Pescara chose to exercise its option to purchase the Player. Merely two months later, on 7 August 2013, Pescara asked Standard Liège to agree to an amended payment schedule which either proves that Pescara either did not have the money to exercise the EUR 900,000 option to purchase the Player, or worse, that it decided to spend the money differently.

120. FIFA pointed to a number of similar transactions Pescara made after being relegated from Serie A at the end of the 2012/13 season. In summary, instead of paying Standard Liège the outstanding transfer fees of EUR 675,000 agreed in July 2012, Pescara chose to purchase 4 new players for a total of EUR 730,000 over the next few years “which must be considered a blatant disrespect of its financial contractual obligations” towards Standard Liège. In light of Pescara engaging in the sort of unreasonable financial behaviour that Article 12bis was enacted to prevent, FIFA submitted that the Sole Arbitrator should disregard Pescara’s assertion that “there was absolutely nothing Pescara could have done to change the commitments undertaken by the club in the past or the financial situation of the club that resulted from the earlier chain of events”.

121. FIFA also noted that Pescara sold the Player for EUR 1m on 8 July 2015 but was still yet to repay Standard Liège for its original purchase of the Player. In fact, 6 days after receiving this amount of EUR 1m, Pescara chose to purchase another player for EUR 300,000. FIFA argued that all these actions demonstrated that it was not the case that Pescara was unable to meet its financial obligations towards Standard Liège, but rather simply chose not to.

122. For the reasons listed above, FIFA submitted that the sanction imposed on Pescara was not unreasonable.

iv. The alleged disproportionality of the sanction

123. FIFA submitted that Pescara didn’t argue that the amount of the fine is, in itself, disproportionate, but rather, that Pescara was arguing that they shouldn’t have been fined at all because being fined is the second most severe sanction available under Article 12bis.

124. FIFA submitted that the imposition of a fine is not the second most severe sanction, as the list of four sanctions contained in Article 12bis was not exhaustive. FIFA may also impose a combination of the sanctions and has “wide discretion when it comes to the sanctioning of clubs”.

125. As Pescara’s argument that it had admitted that the amounts were payable and sought to reach an amicable solution with Standard Liège, rather than attempting to challenge the claim and thereby cause unnecessary costs to Standard Liège was not brought to the attention of the FIFA PSC and was “flagrantly untrue” if taking into account Pescara’s other transfer activity, the fine imposed by the FIFA PSC was neither unreasonable, nor disproportionate. As such, the fine should not be annulled or reduced.

v. The costs of the proceedings

126. FIFA submitted that Pescara deceived Standard Liège, unnecessarily provoked the use of FIFA’s resources, and wasted the time of Standard Liège, FIFA, and the CAS.

127. Addressing Pescara’s argument that because it never requested the grounds of the decision, it cannot be held liable to pay fees under Article 18(3) of the Procedural Rules, FIFA submitted that any reference to Article 18(3) was irrelevant. Pursuant to Article 15(1) of the Procedural Rules, decision making bodies of FIFA may decide not to communicate the grounds of a decision and instead communicate only the findings of the decision. Accordingly, FIFA are capable of providing a decision with grounds immediately, which “as a general rule, applies to all decisions that include an element of sanctioning”. In the present proceedings, the Appealed Decision was notified to the Parties with grounds, and therefore Article 18(3) was not applicable.

128. Addressing Pescara’s argument that the procedural costs were excessive, FIFA submitted that Pescara had forfeited its right to contest this particular element. FIFA argued that this right had been forfeited as a result of Pescara not replying to the claim in the first instance before the FIFA PSC and now claiming that it did not do so because it did not have the financial resources, despite FIFA proving (through submissions of other transfer activity) that Pescara did actually have the financial resources to fulfil its obligations to Standard Liège. Pescara simply chose to spend those resources acquiring new players instead.

129. FIFA also pointed to the table contained in Annex A of the Procedural Rules and stated that the procedural costs levied upon Pescara by the FIFA PSC fully corresponded to that table. The table states as follows:

Amount in dispute Procedural costs up to CHF 50,000 up to CHF 5,000 up to CHF 100,000 up to CHF 10,000 up to CHF 150,000 up to CHF 15,000 up to CHF 200,000 up to CHF 20,000 from CHF 200,001 up to CHF 25,000

vi. FIFA’s answers to the questions posed by the Sole Arbitrator

In summary, FIFA submitted the following responses to the Sole Arbitrator’s questions:

a. What is the relevance to the sanction issued by the Second Respondent of the Appellant’s transfer activity from 2012?

130. FIFA contended that Pescara’s transfer activity of 2012 or any other year had no impact on, or relevance to the sanction imposed on Pescara in the Appealed Decision. The primary reason the FIFA PSC chose to levy a fine upon Pescara was because Pescara did not respond to Standard Liège’s claim, and had no valid reason not to provide a response.

131. FIFA submitted that including Pescara’s transfer activity in its submissions was only to show the Sole Arbitrator that Pescara’s allegations as to why it failed to pay to Standard Liège the overdue amount were simply not true, and that Pescara was using these proceedings to further delay payment to Standard Liège.

b. What other cases has FIFA dealt with to date concerning Article 12bis and can copies of the decisions be provided?

132. FIFA submitted that all decisions regarding overdue payables and Article 12bis were published online on its website. FIFA also provided direct links to 7 decisions in which the FIFA PSC and Dispute Resolution Chamber had imposed a fine on a club which did not reply to an overdue payables claim.

133. FIFA’s decision-making bodies “have been consistent in imposing a fine on clubs which are found responsible to have delayed a due payment for more than 30 days without a prima facie contractual basis and which have failed to answer to the relevant claim without any kind of valid explanation, i.e. precisely as in the matter at hand”.

134. This approach had been systematically applied since April 2015, or 6 months before FIFA sent the 14 October 2015 letter to Pescara, via the FIGC.

c. Is there some form of tariff that the Second Respondent refers to when issuing sanctions?

135. FIFA submitted that the imposition of fines under Article 12bis were not based on tariffs or tables, but on a case-by-case basis, taking into account a number of factors and the specific circumstances surrounding a particular case.

136. FIFA referred to 3 CAS awards (CAS 2006/A/1008, CAS 2012/A/2850 and CAS 2013/A/3358) which confirmed that the percentage of the fine imposed in this instance (i.e. 7.40%) was not disproportionate.

d. At para 19 of the Decision is a reference to ‘repeated offence[s]’ – has the Appellant been sanctioned before in relation to Article 12bis? If so, please provide the details.

137. FIFA confirmed that Pescara had not been sanctioned before in relation to Article 12bis. FIFA submitted that the reference to “repeated offences” was to serve as a warning to Pescara that should it be found responsible for overdue payables in the future, that the relevant sanction could be harsher.