Bahrain Football Association (BFA) v. Adnan Hamad Majid

II. FACTUAL BACKGROUND — A. Background Facts

3. Below is a summary of the main relevant facts and allegations based on the parties’ written submissions, pleadings and evidence adduced. Additional facts and allegations found in the parties’ written submissions, oral pleadings and evidence may be set out, where relevant, in connection with the legal discussion that follows.

4. On 5 August 2014, the parties concluded a contract (hereinafter “the Employment Contract”) by means of which the BFA hired the Coach as full time Head Coach of the First National

Team of Bahrain for a term of two years, starting on 5 August 2014 and ending on 31 July 2016.

5. According to the relevant provisions contained in Articles 3 and 4 of the Employment Contract the BFA agreed to pay the Coach for his services the following amounts:

A. For the first contractual year the amount of 600,000 (six hundred thousand) USD,

payable as per Article 3 in the following manner:

i) 100,000 (one hundred thousand) USD, as an advance payment on 1 September 2014;

ii) 500,000 (five hundred thousand) USD in 12 monthly instalments of 41,667 USD each, payable during the last week of each month starting 31 August 2014 until 31 July 2015.

B. For the second contractual year the amount of 750,000 (seven hundred and fifty

thousand) USD, payable as per the Article 4 in the following manner:

i) 150,000 (one hundred and fifty thousand) USD as an advance payment on 1 September 2015;

ii) 600,000 (six hundred thousand) USD in 12 monthly instalments of 50,000 USD each, payable during the last week of each month starting 31 August 2015 until 31 July 2016.

6. According to Articles 3 and 4 of the Employment Contract the Coach was also entitled to additional benefits every contractual year as follows:

• Housing allowance: The BFA shall provide the Coach with a house as per his desire;

• Car allowance: The BFA shall provide the Coach with a new 4 x 4;

• Tickets: 5 business class tickets per year, 2 business class tickets per year for the spouse, 2 business class tickets per year for the children [3 children];

• Schooling allowance: in one of the schools of the Kingdom [high school]

• Bonuses: USD 100,000 for winning tournament [official or friendly]

• Game Bonuses: as applicable to the Players of national team and as per regulations of the Association.

7. The Employment Contract was accompanied by an Addendum captioned as “Conditions of termination of the Contract” which was also signed by the parties. The Panel notes that the English translations provided by the parties are not identical. However, differences in the two translations do not concern material issues that are relevant to the merits of the case. According to the translation provided by the Respondent the Addendum stipulates as follows:

- “This Addendum is considered to be an integral part of the Contract

• In case the agreement was terminated in the first year by the First Party [i.e. the BFA] the following will be due: The First Party shall pay the Second Party [i.e. the Coach] 2 months salary in addition to the advance payment of the second year (USD 150,000)

• In case the Agreement was terminated in the second year by the First Party [i.e. the BFA] the following will be due: The First Party will pay the Second Party [i.e. the Coach] 2 months salary (in addition to the advance payment of the contract)

• In case the Agreement was terminated in the first year by the Second Party [i.e. the Coach] the following will be due: The Second Party will pay the First Party [i.e. the BFA] the advance payment of the first year in addition to all the remaining salaries for the first year.

• In case the Agreement was terminated in the second year by the Second Party [i.e. the Coach] the following will be due: If termination was during the first 6 months (i.e. prior to January 2015 the Second Party will pay the First Party [i.e. the BFA] the advance payment of the second year (150,000 USD) in addition to 6 months salaries. If termination was during the last 6 months (after January 2015) the Second Party pays the First Party 50% of the second year advance payment, i.e. 75,000 USD in addition to the remaining salaries for the second year”.

8. On 17 November 2014, the BFA terminated unilaterally the Employment Contract. The termination was announced to the Coach in a meeting with the President and the Vice President of the BFA. That same day the BFA issued a press release on its website informing that it had decided to discharge the Coach from his duties as head coach of the national football team with immediate effect, after having reviewed: “the teams’ situation and unconvincing technical level, asserting the need to develop solutions before the third round match in the Gulf Cup tournament and upcoming participation in the 2015 AFC Asian Cup”.

9. Following this the BFA invited the Coach to sign a settlement agreement and to accept a settlement amount of 101,444.52 BHD (Bahraini Dollars), as per the provisions contained in the Employment Contract and Addendum.

10. The Coach did not accept the settlement amount offered by BFA, as he deemed that it did not represent the amounts he was entitled to under the Employment Contract.

11. On 12 December 2014, the legal representative of the Coach notified the BFA of the Coach’s claims for compensation following the termination of the Employment Contract and requested payment of the total amount of USD 2,133,666.

12. On 24 December 2014, the legal representative of the BFA replied that the compensation due to the Coach is calculated on the basis of Article 15 of the Employment Contract [i.e. the Addendum] and amounts to USD 233,334, which corresponds to two full months’ salaries of USD 41,466 each, in addition to the advance payment for the second year. He also informed the Coach that the BFA had already issued a cheque in his name for the total amount of BHD 109,587.910, which exceeds the amount of USD 233,334, and invited him to collect it in full settlement of all amounts due following the termination of the Employment Contract.

13. Notwithstanding this offer the BFA has not made any payments to the Coach to date.

14. On 30 June 2016, the Coach singed an Employment Contract with the Football Club “Al Wehdat” in Jordan with an annual salary of USD 180,000.

B. Proceedings before the FIFA Player’s Status Committee

15. On 22 June 2015, the Coach lodged a claim against the BFA in front of the Player’s Status Committee of FIFA (the “FIFA PSC”) requesting compensation for the early termination of the Employment Contract in the total amount of USD 2,148,540.25 with annual interest at a rate of 5% as from the date of termination i.e. as of 17 November 2014, as follows:

“a. USD 375,000 for the residual value of the agreement for the first year, i.e. from November 2014 to July 2015 according to Bahraini law; b. USD 750,000 for the residual value of the agreement for the second year including 12 monthly salaries and the advance payment; c. USD 20,833.50 as “end of service benefit” according to Bahraini law; d. USD 233,334 as “end of service benefit” based on the addendum; e. USD 11,822.01 corresponding to the accrued annual leave according to Bahraini law; f. USD 1,047.74 corresponding to return expenses to Iraq for the Coach and his family in accordance with article 6 of the Contract and the Labour Market Regulation Authority law; g. USD 6,500 corresponding to the flight tickets the coach and his family would have been entitled to if the agreement had not been terminated; h. USD 750,000 corresponding to the damage to his reputation under the Bahraini Civil Code and considering the press statement made by the BFA”.

16. During the course of the proceedings the Coach modified slightly his initial claim by amending his request for an end of service benefit according to Bahraini law from the amount USD 20,833 to USD 5,937, thus, reducing the total amount requested to USD 2,133,643.75.

17. The BFA argued that according to the Addendum of the Employment Contract the parties had agreed upon an amount of compensation in case of termination, in line with Article 17 of the FIFA Regulations on the Status and Transfer of Players (the “FIFA RSTP”) and, consequently, the amount of compensation due to the Coach was limited to USD 271,910.15 as follows:

“a. USD 233,334 as amount of compensation based on the Addendum; b. USD 10,416.75 for the accrued holiday time; c. USD 22,222.40 corresponding to the outstanding salary from 1 November to 16 November 2014; d. USD 5,937 corresponding to the “end of service payment” under Bahraini Law”.

18. On 15 June 2016, the Single Judge of the FIFA PSC rendered a decision on the matter (the “Appealed Decision”) with, inter alia, the following operative part:

“1. The claim of the Claimant, Adnan Hamad Majid is admissible. 2. The claim of the Claimant, Adnan Hamad Majid is partially accepted. 3. The Respondent, Bahrein Football Association, has to pay the Claimant, Adnan Hamad Majid, within 30 days as from the date of notification of the present decision, the amount of USD 1,002,740 as compensation for breach of contract as well as 5% interest per year on the said amount from 22 June 2015 until the date of effective payment. (…) 5. Any further claims lodged by the Claimant, Adnan Hamad Majid, are rejected.(…)”.

19. On 6 April 2017, FIFA notified the grounds of the Appealed Decision to the parties, determining, essentially, the following:

• The BFA did not contest having dismissed the Coach. The dismissal of the Coach occurred without just cause and the contractual relationship has de facto ended on 17 November 2014.

• The Addendum of the Employment Contract provided for the amount of compensation payable in the event of contract termination by the BFA and by the Coach. However, said Addendum contravenes the general principle of proportionality and the principle of equal treatment, since it blatantly provided a higher amount of compensation towards the BFA with no analogous right in favour of the Coach.

• On those grounds the Addendum cannot be applied to determine the amount of compensation due neither the amount for an end of service benefit.

• The amount of compensation shall be assessed in accordance with other criteria taking into consideration the residual value of the Employment Contract.

• Taking into consideration that the Employment Contract was valid until 31 July 2016 the Coach is in principle entitled to the remaining value of his salary for the unilateral termination without just cause. That amounts to USD 1,125,000 USD corresponding to 9 monthly salaries of USD 41,667 each for the first year and 12 monthly salaries of USD 50,000 each for the second year as well as USD 150,000 as advance payment for the second year.

• It was verified that the Coach had not been able to sign an employment contract with another Club during the relevant period of time. However, considering that the contract termination occurred on 17 November 2014 the Coach had opportunities to find a new club and thus to mitigate to some extent his loss of income.

• Consequently, the BFA must not pay the entire residual value of the Employment Contract but the amount of USD 1,000,000 which is a reasonable and proportionate amount of compensation for breach of contract in this case.

• In addition, the BFA must compensate the Coach with the amount of USD 2,740 for air tickets for the coach and his family.

III. PROCEEDINGS BEFORE THE COURT OF ARBITRATION FOR SPORT

20. On 4 May 2017, the BFA filed a Statement of Appeal pursuant to Article R48 of the CAS Code of Sports-related Arbitration (the “Code”) with the Court of Arbitration for Sport (the “CAS”) against the Coach with respect to the Appealed Decision. With its Statement of Appeal, the BFA nominated Mr Boris Vittoz, attorney-at-law in Lausanne, as an arbitrator in the present matter. The Statement of Appeal also contained a request for evidentiary measures and in particular the production of documents by the Coach and the production of the full case file by FIFA.

21. On 17 May 2017, the BFA filed an appeal brief pursuant to Article R51 of the Code with following requests for relief:

“The Bahrain Football Association applies for the Court of Arbitration for Sport to rule as follows: i. The Appeal is upheld. ii. The FIFA decision issued on 15 June 2016 in the matter between the Bahrain Football Association and Adnan Hamad Majid is annulled. iii. The Bahrain Football Association owes a maximum amount of USD 255,556.40 (two hundred fifty-five thousand and five hundred fifty -six US Dollars and forty cents) to Mr Adnan Hamad. iv. Mr Adnan Hamad Majid shall bear all arbitration costs and shall be ordered to reimburse the Appellant the minimum CAS Court Office fee of CHF 1,000 as well as any other amounts of advances of costs paid to the CAS. v. Mr Adnan Hamd Majid shall be ordered to pay the Bahrain Football Association a contribution towards the legal and other costs incurred by the latter in the framework of these proceedings, in an amount to be determined at the discretion of the Panel”.

22. On 25 May 2017, the Respondent nominated Mr Mark Hovell, solicitor in Manchester, as an arbitrator in the present matter.

23. On 21 June 2017, pursuant to Article R54 of the Code, and on behalf of the President of the CAS Appeals Arbitration Division, the CAS Court Office informed the parties that the Panel appointed to decide the present matter was constituted by:

President: Mr Sofoklis P. Pilavios, attorney-at-law in Athens, Greece Arbitrators: Mr Boris Vittoz, attorney-at-law in Lausanne, Switzerland Mr Mark Andrew Hovell, solicitor in Manchester, United Kingdom

24. On 26 June 2017, the CAS Court Office, upon directions by the Panel, invited FIFA to provide a copy of the complete case file in connection to the Appealed Decision.

25. On 18 July 2017, the Respondent filed an answer in accordance with Article R55 of the Code, with the following requests for relief:

“[…] Mr Hamad respectfully requests that the CAS orders that:

(a) the BFA’s appeal is dismissed; (b) the PSC Decision is upheld; (c) the BFA shall be liable for all the costs of this arbitration; and (d) the BFA shall be liable for all of Mr Hamad’s costs incurred in relation to this arbitration, including but not limited to legal fees, disbursements and any and all fees payable to the CAS”.

26. On 19 July 2017, the CAS Court office invited the parties to state whether they prefer for a hearing to be held in the matter or for the Panel to issue an award based solely on the parties’ written submissions.

27. On 26 July 2017, the parties informed the CAS Court office of their preference for a hearing to be held in the matter.

28. On 2 August 2017, the parties were informed that the Panel, in accordance with Article R57 of the Code, had decided to hold a hearing. By same correspondence the Respondent was ordered to disclose a copy of his employment contract with Al-Wehdat, and to provide an English translation of such document.

29. On 9 August 2017, the Respondent submitted a copy of his employment contract with Al- Wehdat together with an English translation.

30. On 18 October 2017, the CAS Court Office sent a copy of the Order of Procedure to the parties and on 20 October 2017 and on 30 October 2017 the Respondent the Appellant, respectively, returned a duly signed copy.

31. On 19 October 2017, FIFA provided a copy of the complete case file in the matter.

32. On 31 October 2017, a hearing was held in Lausanne, Switzerland.

33. The Panel was assisted by Mr Daniele Boccucci, Counsel to the CAS and the hearing was attended by the following persons on behalf of the parties:

a) For the Appellant: Mr Abdulla Alsowaidi, representative of the BFA, Mr Jorge Ibarrola, counsel, Mr Sebastian Permain, counsel, and Ms Dana Morales Cardenas, observer, intern.

b) For the Respondent: Mr Adnan Hamad Majid, the Respondent himself, Dr Stephan Netzle, counsel, Mr Stephen Sampson, counsel and Mr Saad Watt Awal, interpreter.

34. The following witnesses testified: i) Rania Tarabie, President’s Assistant for the BFA (by teleconference) ii) Abel Al Ansaari, Head of National Team’s Department at the BFA (by teleconference), iii) Ms Layala Shehab, Head of Labour arbitration and consultation at the Ministry of Labour of the Kingdom of Bahrain (by teleconference), all for the Appellant.

35. Before the hearing was concluded, both parties expressly stated that they did not have any objection with respect to the procedure and that their right to be heard had been respected.

36. The Panel confirms that it carefully took into account in its deliberations all of the submissions, evidence, and arguments presented by the parties, even if they have not been specifically summarized or referred to in the present award.

37. On 20 March 2018, the Appellant filed additional submissions and documents, to the admissibility of which the Respondent objected on 23 March 2018.

38. On 26 March 2018, the CAS Court Office informed the parties of the Panel’s decision to declare inadmissible the Appellant’s submissions filed on 20 March 2018, pursuant to Article

IV. SUBMISSIONS OF THE PARTIES — A. The Appellant

39. The submissions of the BFA, in essence, may be summarized as follows:

• In its written submissions the BFA argued that the Employment Contract did not contain an explicit choice of law, therefore, the Panel should apply primarily FIFA Regulations and subsidiarily Swiss law, in accordance with Article 57 of FIFA Statutes and Article R58 of the Code. In its oral pleadings, however, the BFA argued against the subsidiary application of Swiss law and in favour of the supplementary application of Bahraini law.

• The BFA admits that it terminated the Employment Contract on 17 November 2014 on account of the poor results of the Bahraini National Team, yet, argues that the compensation due to the Coach should be calculated according to Article 15 of the Employment Contract (i.e. the Addendum), which is a valid and enforceable clause under the respective FIFA Regulations, but also falls in line with Swiss law, as well as with Bahraini law.

• Article 15 of the Employment Contract (i.e. the Addendum) is a liquidated damages clause in compliance with the requirements of Article 17 of the FIFA RSTP, as it sets out in detail the consequences for unilateral contract termination by one or the other party.

• This clause was drafted and negotiated by the Coach’s agent, in order for him to be able to terminate the Contract at any point and also to be adequately compensated in the event of termination by the BFA.

• Subsidarily, this clause is a valid and enforceable penalty clause under Swiss law, on the basis of Articles 160 and 163 of the Swiss Code of Obligations (hereinafter the “CO”), and its content is compatible with all requirements provided therein.

• Finally, the content of Article 15 (i.e. the Addendum) does not contravene the principle of equal treatment or the principle of proportionality. There is no provision in Swiss law that requires penalty clauses to be reciprocal in order to be valid. At any rate, this

provision is reciprocal in the sense that it provides for damages for either party in the event of contract termination by the other.

• The provision of Article 15 (i.e. the Addendum) is also valid under Bahraini law and in particular, Article 111 (c) of the Bahraini Labour Law, that allows for the parties to agree on any amount of compensation in case of contract termination by the employer, provided that the compensation agreed upon does not fall below the wage of three months or the wage for the remaining period, whichever is lesser.

• In conclusion, according to Article 15 of the Employment Contract (i.e. the Addendum) the compensation due to the Coach corresponds to two months salary instalments in the amount of USD 83,334 (41,667 x 2), plus the advance payment for the second contractual year in the amount of 150,000 USD. On this basis the BFA maintains that the Coach’s entitlement to compensation does not exceed the amount of 233,334 USD. In addition to this amount the BFA acknowledges that it owes the Coach part of his salary instalment for the period from 1 to 16 November 2014 in the amount of 22,222.40 USD.

B. The Respondent

40. The submissions of the Coach, in essence, may be summarized as follows:

• Article 17 of the FIFA RSTP is not applicable in present case, as its scope is limited to cases of contract termination between players and clubs and does not regulate cases between coaches and associations.

• The compensation due in the present case must be assessed by applying Swiss law and must comply with the mandatory provision contained in Article 337 (c) (1) of CO.

• The Coach firmly denies that he had appointed an agent to negotiate and draft the Employment Contract on his behalf. The Employment Contract was drafted by the BFA and the Addendum could not have possibly been added at the request of the Coach, as such provision does not effectively protect his rights.

• The Coach provided his services in compliance with the contractual terms. The Coach had not been given any warning of any alleged breach, or, prior notice that his Contract would be terminated.

• The BFA does not dispute having unilaterally terminated the Employment Contract on 17 November 2014 due to the poor results of the Bahraini National team. However, the teams’ results and performance do not constitute just cause for termination. Therefore, the BFA’s termination was without just cause.

• The compensation due to the Coach should be assessed solely with reference to Article 337 (c) (1) of CO, which is applicable in cases of contract termination without just cause by the employer. Pursuant to this provision the Coach is entitled to receive full compensation in the amount that he would have earned had the Employment Contract expired on its agreed fixed term, namely until 31 July 2016. This is also consistent with the Swiss law doctrine of positive interest.

• Article 337 (c) (1) of CO creates a mandatory obligation for the employer, which cannot be derogated from to the detriment of the employee. This excludes the application of a liquidated damages clause that does not effectively provide for full compensation in accordance with Article 337 (c) (1) of CO. The amount of compensation provided for in the Addendum does not fully compensate the Coach for his actual loss. Therefore, such provision in so far as it compromises the entitlement of the Coach to full damages must be considered null and void.

• In addition, the Addendum cannot be understood to create a right for the BFA to terminate the Employment Contract, as there is no clear wording to indicate so. The circumstances for lawful termination by the parties are set out exhaustively in Article 11 of the Employment Contract.