Shanghai Shenhua FC v. Fédération Internationale de Football Association (FIFA)

II. FACTUAL BACKGROUND

3. Below is a summary of the relevant facts and allegations based on the Parties’ written submissions, pleadings and evidence adduced in these proceedings. References to additional facts and allegations found in the Parties’ written submissions, pleadings, and evidence will be made, where relevant, in connection with the legal analysis that follows. While the Sole Arbitrator has considered all the facts, allegations, legal arguments and evidence submitted by the Parties in the present proceedings, the Award only refers to the submissions and evidence it deems necessary to explain its reasoning.

A. Backgrounds facts

4. On 27 February 2020, the Single Judge of the FIFA Players’ Status Committee (the “PSC”) decided that Shanghai had to pay to the coach Enrique Sánchez Flores (the “Creditor”) within 30 days from the date of notification of the relevant decision (the “PSC Decision”), the following amounts:

- EUR 500,000, plus interest at a rate of 5% p.a, as from 5 July 2019 until the date of effective payment;

- EUR 12,000,000 and USD 150,000, plus interest at a rate of 5% p.a, as from 16 September 2019 until the date of effective payment.

5. The PSC Decision also indicated that Shanghai “must provide the Claimant with the relevant tax certificates indicating the specific tax withholding made on the amounts paid to the Respondent during the term of the contractual relationship between the parties”.

6. The grounds of the PSC Decision were notified to Shanghai on 28 April 2020.

7. On 17 May 2020, the Appellant filed an appeal before Court of Arbitration for Sport (“CAS”) against the PSC Decision (with reference CAS 2020/A/7086).

8. On 29 January 2021, the Appellant informed the CAS Court Office that it was withdrawing its appeal.

9. On 8 March 2021, CAS issued an award on costs, by means of which the appeal filed by the Appellant against the PSC Decision was terminated and removed from the CAS roll.

B. Proceedings before the FIFA Disciplinary Committee

10. As the relevant amounts had not been paid, on 26 March 2021 the Creditor requested FIFA to open disciplinary proceedings against Shanghai.

11. On the same date, the secretariat of the FIFA Disciplinary Committee opened disciplinary proceedings against the Appellant for a potential failure to respect a decision passed by a body, a committee or an instance of FIFA or a CAS decision, inviting the Appellant to provide its position regarding the allegations made by the Creditor or proof of payment of the outstanding amounts within the following 6 days.

12. Following the opening of disciplinary proceedings, on 1 April 2021 Shanghai provided “the corresponding tax certificate indicating the specific tax withholdings made during the term of the contractual relationship between the parties”, while it did not give any evidence of its fulfilment of the financial obligations set out in the PSC Decision.

13. On 22 April 2021, the FIFA Disciplinary Committee passed a decision on the matter (hereinafter, also referred to as the “Appealed Decision”), stating as follows:

“1. Shanghai Shenhua FC is found guilty of failing to comply in full with the decision passed by the Single Judge of the Players’ Status Committee on 27 February 2020.

2. Shanghai Shenhua FC is ordered to pay to the coach Enrique Sánchez Flores as follow:

- EUR 500,000, as outstanding remuneration, plus 5% interest p.a. as from 5 July 2019 until the date of effective payment;

- EUR 12,000,000 and USD 150,000 as compensation for breach of contract, plus 5% interest p.a. as from 16 September 2019 until the date of effective payment.

3. Shanghai Shenhua FC is granted a final deadline of 30 days as from the notification of the present decision in which to settle said amount. Upon expiry of the aforementioned final deadline and in the event of persistent default or failure to comply in full with the decision within the period stipulated, a transfer ban will be pronounced until the complete amount due is paid or the non-financial decision is complied with. The transfer ban will be implemented automatically at national and international level by the Chinese Football Association and FIFA respectively, without a further formal decision having to be taken nor any order to be issued by the FIFA Disciplinary Committee or its secretariat. In addition, a deduction of points or relegation to a lower division may also be ordered in addition to transfer ban in the event of persistent failure, repeated offences or serious infringements or if no full transfer could be imposed or served for any reason.

4. Shanghai Shenhua FC is ordered to pay a fine to the amount of CHF 30,000. The fine is to be paid within 30 days of notification of the present decision”.

14. The findings of the Appealed Decision were notified to the Appellant on 27 April 2021 and its grounds were notified to the Appellant on 17 May 2021.

III. PROCEEDINGS BEFORE THE COURT OF ARBITRATION FOR SPORT

15. On 4 June 2021, the Appellant filed a statement of appeal with the CAS in accordance with Articles R47 and R48 of the Code of Sports-related Arbitration (hereinafter, also referred to as the “CAS Code”) against FIFA with respect to the Appealed Decision. The Appellant requested to submit this matter to a Sole Arbitrator and the Respondent agreed to such request.

16. On 7 July 2021, the Appellant filed its Appeal Brief in accordance with Article R51 of the CAS Code.

17. On 17 August 2021 the Respondent filed its Answer in accordance with Article R55 of the CAS Code.

18. On 14 September 2021 the Parties were informed that the President of the CAS Appeals Arbitration Division appointed Mr Cesare Gabasio as Sole Arbitrator in accordance with Article

19. On 15 September 2021, after having consulted the Parties, the Sole Arbitrator decided to hold a hearing by video-conference, pursuant to Article R57 of the Code.

20. On 5 October 2021, the CAS Court Office, on behalf of the Sole Arbitrator, issued the Order of Procedure, which was duly signed by the Parties. By signing the Order of Procedure, the Parties confirmed the CAS jurisdiction to hear the appeal.

21. On 15 December 2021 a video-hearing took place, with the participation, in addition to the Sole Arbitrator and Mr. Antonio Quesada, CAS Head of Arbitration, of all Parties’ representatives. The Parties were given a full opportunity to present their case, submit their arguments/submissions and answer the questions posed by the Sole Arbitrator. In particular, pursuant to Article R59 of the CAS Code, FIFA requested the Sole Arbitrator to communicate the operative part of the award to the Parties prior to the delivery of the reasons. No Party objected to the constitution of the arbitral tribunal and at the conclusion of the hearing, the Parties expressly confirmed that their right to be heard was fully respected.

IV. SUBMISSIONS OF THE PARTIES — A. The Appellant

22. In its Appeal Brief the Appellant submitted the following requests for relief:

“1. Accept the present appeal against the decision passed by the FIFA Disciplinary Committee on 22 April 2021, grounds of which were notified to the Appellant on 17 May 2021, in the disciplinary proceedings opened against the Appellant registered in FIFA with reference number FDD-7891;

2. Set aside the Appealed Decision and refer the case back to FIFA

On the alternative to point 2 above

3. Set aside the Appealed Decision and issue a new decision in which the fine imposed on SHANGHAI SHENHUA FC is lowered in due consideration of the principle of proportionality, if at all imposed.

In any case,

4. to fix a minimum amount of CHF 20,000 (twenty thousand Swiss francs) to be paid by FIFA to SHANGHAI SHENHUA FC as contribution to its legal fees and costs.

5. Condemn FIFA to pay the whole CAS administration and the Arbitrators fees”.

23. The submissions of the Appellant, in essence, may be summarized as follows.

- The 30-days deadline granted to Shanghai to comply with the PSC Decision would have start to run only from 8 March 2021, when the CAS award on cost was issued. Therefore, the FIFA Disciplinary Committee wrongly opened the disciplinary procedure against Shanghai, since on 26 March 2021 the aforesaid 30-days deadline had not yet expired.

- The fine of CHF 30.000 set out in the Appealed Decision, would be disproportionate, as the conduct of Shanghai does not inflict any damage to FIFA or to football as a sport and caused only little damage to the Creditor.

B. The Respondent

24. FIFA submitted the following requests for relief:

“1. To reject the Appellant’s appeal in its entirety;

2. To confirm the decision FDD-7891 rendered by the member of the FIFA Disciplinary Committee on 22 April 2021;

3. To order the Appellant to bear all costs incurred with the present procedure and to cover all the legal expenses of FIFA related to the present procedure”.

25. The submissions of FIFA may be summarized as follows.

- By analogy to Article 190(1) PILA, the PSC Decision is final from the time when it is communicated.

- The 30-day deadline did not restart with the CAS award on costs issued on 8 March 2021, but it was only suspended while the CAS proceeding was ongoing and continued its course when the Appellant voluntarily withdrew its appeal on 29 January 2021 or, at least, when the CAS award on cost was issued on 8 March 2021. Therefore, when on 26 March 2021 the disciplinary procedure was opened against Shanghai, the 30-day deadline granted by the PSC Decision has elapsed.

- The fine of CHF 30.000 cannot be considered as evidently and grossly disproportionate to the offence, taking into account that the sum at stake represents the 0,2% of the total debt of Shanghai towards the Creditor and the Appellant failed to comply with its financial obligations since July 2019.