Cruzeiro Esporte Clube v. Fédération Internationale de Football Association (FIFA)

FACTUAL BACKGROUND

5. Below is a summary of the main relevant facts, as established on the basis of the Parties’ written submissions on the file and relevant documentation produced in this appeal. Additional facts and allegations found in the Parties’ submissions may be set out, where relevant, in connection with the further 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, the Award only refers to the submissions and evidence it considers necessary to explain its reasoning.

Proceedings before the FIFA Player’s Status Committee and Appeals to CAS

6. On 8 May 2017, the FIFA Player’s Status Committee (“PSC”) rendered a decision (the “FIFA PSC Tigres Decision”), in which the Club was ordered to pay to the Mexican club Tigres UANL (the “Creditor”) as compensation for the transfer of the football player R. (the “Player) the amount of USD 1,000,000 plus 5% p.a. interest as from 2 November 2016 and USD 5,000 as procedural costs. The grounds of the FIFA PSC Tigres Decision were communicated to the Club on 13 July 2017.

7. On 3 August 2017, the Club filed an appeal against the FIFA PSC Tigres Decision before the Court of Arbitration for Sport (“CAS”) (CAS 2017/A/5279).

8. On 13 April 2018, the CAS issued an arbitral award in CAS 2017/A/5279, in which the FIFA PSC Tigres Decision was upheld.

9. This notwithstanding, the Club subsequently did not make any payments to the Creditor.

10. On 23 April 2019, in light of the above, the FIFA PSC referred the case to the FIFA DC.

Proceedings before the FIFA Disciplinary Committee

11. On 14 May 2019, the FIFA DC opened disciplinary proceedings against the Club for the possible violation of Article 64 of the FIFA Disciplinary Code (“FDC”). The FIFA DC further requested the Club to provide its position by 20 May 2019, and also informing the

Club that the disciplinary proceedings would be closed if the outstanding amounts were paid by this date.

12. On 23 May 2019, the Club submitted its position to the FIFA DC.

13. On 28 May 2019, the FIFA DC rendered the Appealed Decision.

14. In the Appealed Decision, the FIFA DC held as follows:

1. “The club Cruzeiro Esporte Clube (hereinafter, the Debtor) is found to have infringed art. 64 of the FIFA Disciplinary Code as it is guilty of failing to comply with the award issued by the Court of Arbitration for Sport (CAS) on 13 April 2018, according to which it was ordered to pay:

• To the club FC Tigres (hereinafter, the Creditor):

o USD 1,000,000 plus 5% interest p.a. as from 2 November 2016 until the date of effective payment;

o CHF 2,000 as contribution towards the legal costs and expenses incurred in connection with the arbitration proceedings;

o CHF 5,000 as procedural costs;

• To FIFA:

o CHF 10,000 as final costs of the proceedings.

2. The Debtor is ordered to pay a fine to the amount of CHF 30,000. The fine is to be paid within 90 days of notification of the present decision.

3. The Debtor is granted a final deadline of 90 days as from notification of the present decision in which to settle its debt to the Creditor and FIFA.

4. If payment is not made to the Creditor and proof of such payment is not provided to the secretariat to the FIFA Disciplinary Committee and to the Brazilian Football Association by this deadline, a ban from registering new players, either nationally or internationally, for two (2) entire and consecutive registration periods will be imposed on the Debtor as from the first day of the next registration period following the expiry of the granted deadline. Once the deadline has expired, the transfer ban will be implemented automatically at national and international level by the Brazilian 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 […]. The Debtor shall be able to register new players, either nationally or internationally, only from the next registration period following the complete serving of the transfer ban or upon the payment to the Creditor of the total outstanding amount, if this occurs before the full serving of the transfer ban. […]

5. If the Debtor still fails to pay the amount due to the Creditor even after the complete serving of the transfer ban in accordance with point 4 above, the Creditor may demand in writing, for the imposition of the

appropriate disciplinary measures, including but not limited to an additional transfer ban for two (2) additional entire and consecutive registration periods or a potential relegation of the Debtor’s first team to the next lower division.

6. As a member of FIFA, the Brazilian Football Association is reminded of its duty to implement this decision and provide FIFA with proof that the points have been deducted in due course. If the Brazilian Football Association does not comply with this decision, the FIFA Disciplinary Committee will decide on appropriate sanctions on the member. This can lead to an expulsion from FIFA competitions.

7. The Debtor is directed to notify the secretariat to the FIFA Disciplinary Committee as well as the Brazilian Football Association of every payment made and to provide the relevant proof of payment.

8. The Creditor is directed to notify the secretariat to the FIFA Disciplinary Committee as well as the Brazilian Football Association of every payment received”.

15. The FIFA DC’s considerations leading to the Appealed Decisions were expressed as follows:

“1. According to art. 53 par. 2 of the FIFA Statutes, the Disciplinary Committee (hereinafter also referred to as the Committee) may pronounce the sanctions described in the Statutes and the FIFA Disciplinary Code (hereinafter also referred to as the FDC) on member associations, clubs, officials, players, intermediaries and licensed match agents.

2. Anyone who fails to pay another person (such as a player, a coach or a club) or FIFA a sum of money in full or part, even though instructed to do so by a body, a committee or an instance of FIFA or a subsequent CAS appeal decision (art. 64 par. 1 of the FDC):

a) will be fined for failing to comply with a decision;

b) will be granted a final deadline by the judicial bodies of FIFA in which to pay the amount due;

c) if it is a club, it will be warned and notified that, in the case of default or failure to comply with a decision within the period stipulated, points will be deducted or demotion to a lower division ordered. A transfer ban may also be pronounced.

If the club disregards the final time limit, the relevant association shall be requested to implement the sanctions threatened (art. 64 par. 2 of the FDC).

3. Moreover, in line with art. 78 par. 2 of the FDC, cases involving matters under art. 64 of the FDC may be decided by one member of the Disciplinary Committee alone (hereinafter also referred to as member of the Committee).

4. The member of the Committee emphasises that equal to the competence of any enforcement authority, it cannot review or modify as to the substance a previous decision, which is final and binding and, thus, has become enforceable.

5. Having said that, the member of the Committee notes that the findings of the decision passed by the Single Judge of the Players’ Status Committee on 8 May 2017 had been duly communicated on 30 May 2017,

amongst others to the parties, and that the grounds had been requested by the Debtor and duly communicated on 13 July 2017 to the parties. The member of the Committee also notes that the Debtor lodged an appeal before the Court of Arbitration for Sport (CAS). On 13 April 2018, the CAS dismissed the appeal and confirmed the decision passed by the Single Judge of the Players’ Status Committee on 8 May 2017. The member of the Committee finally notes that no appeal against the award passed by the Court of Arbitration for Sport was lodged before the Swiss Federal Tribunal. Therefore, the arbitral award of the Court of Arbitration for Sport became final and binding.

6. In view of what has been explained under paragraph II./4. above, the member of the Committee is not allowed to analyse the case decided upon by the CAS as to the substance, in other words, to check the correctness of the amount ordered to be paid, but has as a sole task to analyse if the Debtor complied with the final and binding award rendered by the CAS on 13 April 2018.

7. In this respect, the member of the Committee first acknowledges that the Debtor claimed that it is facing “exceptional circumstances” due to the financial recession and political crisis in Brazil as well as the devaluation of the Brazilian currency.

8. In light of these elements, the member of the Committee finds it worthwhile to emphasise that a club has the duty to be aware of its actual financial strength, constitute provision in anticipation of possible issues and finally conclude contracts that can be fulfilled. In other words, the principle of pacta sunt servanda – more relevant in the context of contractual dispute per se – is of paramount importance for FIFA and a key issue to be protected among others by the Regulations on the Status and Transfer of Players. To that end, the Committee equally refers to the content of art. 2 of the Swiss Civil Code, according to which “[e]very person is bound to exercise his rights and fulfil his obligations according to the principle of good faith” (cf. par. 45 ff. CAS 2010/A/2144 Real Betis Balompié SAD v. PSV Eindhoven). Thus, the sole fact that the Debtor may be undergoing financial problems does not exonerate it from its obligations to pay the outstanding amounts owed to the Creditor.

9. In addition to the above, the member of the Committee wishes to recall that the alleged financial difficulties the Debtor faces because of the economic crisis and the consequential loss of value of the local currency are not valid arguments, as already confirmed by the CAS: “the Sole Arbitrator fails to see how the fall in value of the Brazilian currency can either be a justification for non-payment, or how it amounts to “exceptional circumstances”. The fluctuations of foreign currency are a standard risk in business dealings and any entity dealing in foreign currency […] ought to be aware of the possibility of it and should plan its financial dealings accordingly. Pursuant to the principle of pacta sunt servanda, the Club should have been aware of its financial situation” (cf. par. 118 CAS 2018/A/5864 Cruzeiro E.C. v FIFA).

10. Concerning the Debtor’s request to be granted a “fair” final period of grace of 120 days to pay the outstanding amount due to the Creditor, the member of the Committee recalls that due to the fact that the award rendered by the CAS is now final and binding, it cannot decide to grant a possible deadline extension to pay the outstanding amount due and/or to impose a possible payment plan. As a consequence, a possible deadline extension and/or a possible payment plan would have to be agreed upon directly with the Creditor, in the present case the club Atlético Morelia [sic], which at its own discretion can accept or not the deadline extension and/or payment plan proposed.

11. The member of the Committee subsequently emphasises that, as the Debtor did not fully comply with the award rendered by the CAS and is consequently withholding money from the Creditor, it is considered guilty under the terms of art. 64 of the FDC.

12. The fine to be imposed under the above-referenced art. 64 par. 1 a) of the FDC in combination with art. 15 par. 2 of the FDC shall range between CHF 300 and CHF 1,000,000. The Debtor withheld the amount unlawfully from the Creditor. Even FIFA’s attempts to urge the Debtor to fulfil its financial obligations failed to induce it to pay the total amount due. In view of all the circumstances pertaining to the present case and by taking into account the outstanding amount due, the member of the Committee regards a fine amounting to CHF 30,000 as appropriate. This amount complies with the Committee’s established practice.

13. In application of art. 64 par. 1 b) of the FDC, taking into consideration that the Debtor already owes money to the Creditor for a considerable period of time, the member of the Committee considers a final deadline of 90 days as appropriate for the amount due to be paid to the Creditor.

14. In accordance with art. 64 par. 1 c) of the FDC and with the Circular n° 1628, the Debtor is hereby warned and notified that, in the case of default within the period stipulated, points will be deducted, a transfer ban may also be pronounced or demotion to a lower division may be ordered.

15. In this regard, in case of non-compliance with the award rendered by CAS, a ban from registering any new players, either nationally or internationally, will be automatically imposed on the Debtor as from the first day of the next registration period following the expiry of the granted deadline.

16. In this sense, in view of the amount of the outstanding debt, the member of the Committee considers a transfer ban for two (2) entire and consecutive registration periods to be proportionate. Once the deadline has expired, the transfer ban will be implemented automatically at national and international level by the Brazilian 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.

17. The Brazilian Football Association is hereby reminded of its obligation to automatically implement the abovementioned transfer ban upon expiry of the final deadline without having received any proof of payment from the Debtor. In this respect, and for the sake of clarity, the Brazilian Football Association is referred to arts. 90 to 92 of the FDC in what concerns the calculation of time limits. Should the Brazilian Football Association fail to automatically implement said sanction and provide the secretariat to the FIFA Disciplinary Committee with the relevant proof of implementation of the transfer ban at national level, disciplinary proceedings – which may lead to an expulsion from all FIFA competitions – may be opened against it.

18. Finally, the member of the Committee considered that should the Debtor still fail to settle its debt to the Creditor even after the complete serving of the transfer ban, the Creditor may demand in writing, for further disciplinary measures to be imposed on the Debtor”.

16. The grounds of the Appealed Decision were communicated to the Club on 4 July 2019.

PROCEEDINGS BEFORE THE COURT OF ARBITRATION FOR SPORT

17. On 25 July 2019, the Club filed a Statement of Appeal with the CAS in accordance with Article 58 of the FIFA Statutes and Articles R47 and R48 of the Code of Sports-related Arbitration (2019 edition) (the “CAS Code”). In the Statement of Appeal, the Club proposed that this dispute be submitted to a sole arbitrator and suggested the appointment of Mr David M. Benck, Attorney-at-Law in Birmingham, Alabama, USA, in this regard.

18. On 2 August 2019, the CAS Court Office acknowledged the filing of the Statement of Appeal and invited the Club to file with the CAS, within ten days following the expiry of the time limit for the appeal, a brief stating the facts and legal arguments giving rise to the appeal. The CAS Court Office further invited FIFA to state whether FIFA consented to the appointment of a Sole Arbitrator in this case and, specifically, with the appointment of the arbitrator suggested by the Club.

19. On 8 August 2019, FIFA expressed its consent with the appointment of a Sole Arbitrator as long as the arbitrator was nominated by the President of the CAS Appeals Division (rather than appointing the Appellant’s suggested appointee) from the football list of CAS arbitrators.

20. On 9 August 2019, inter alia the CAS Court Office invited the Parties to indicate whether they would agree to refer the procedure-at-hand and the procedure CAS 2019/A/6393 to the same Sole Arbitrator, pursuant to Article R50 of the CAS Code.

21. On 9 August 2019, FIFA expressed its consent with the submission of both cases to the same Sole Arbitrator further to Article R50 of the CAS Code.

22. On 15 August 2019 the Club agreed to refer both cases to the same arbitrator further to Article R50 of the CAS Code and suggested that Ms Laura Abrahamson, Attorney-at-law, Los Angeles, California, USA, be appointed as the Sole Arbitrator in both cases.

23. On 16 August 2019, the CAS Court Office informed the Parties that, in light of their agreement, the procedures CAS 2019/A/6392 and CAS 2019/A/6393 shall be referred to the same Sole Arbitrator in accordance with Article R50 of the CAS Code. The CAS Court Office further informed the Parties that they may propose a joint nominee as the Sole Arbitrator to the Division President, but that this propsal would be subject to confirmation, and in this regard invited FIFA to inform the CAS Court Office whether FIFA agreed to propose the nomination of Ms Laura Abrahamson as the Sole Arbitrator.

24. On 19 August 2019, FIFA affirmed its previously stated positions, agreeing with the appointment of a Sole Arbitrator for both proceedings as long as the arbitrator was nominated by the President of the CAS Appeals Division from the football list.

25. On 19 August 2019, after an agreed extension, the Club filed its Appeal Brief pursuant to Article R51 of the CAS Code.

26. On 23 August 2019, the CAS Court Office acknowledged receipt of the Club’s Appeal Brief dated 19 August 2019, and invited the Respondent to submit its Answer within 20 days following the receipt of that communication by courier.

27. On 26 August 2019, FIFA sent a letter to CAS in which FIFA alerted the CAS Court Office to the apparent non-payment of the Appellant’s share of the advance of costs and requested that the deadline for FIFA’s filing of its Answer be suspended and reset after the payment of the advance of costs by the Appellant further to Article R55 of the CAS Code.

28. By letter of the same date, the CAS Court Office informed the Parties that the time limit for FIFA’s Answer was suspended and that a new time limit shall be fixed upon the Appellant’s payment of its share of the advance of costs, in accordance with Article R55 of the CAS Code.

29. On 30 September 2019, the CAS Court Office acknowledged receipt of the Appellant’s share of the advance of costs and granted FIFA a deadline of 20 days to file its Answer. The Parties were furthermore informed that the Panel appointed by the Deputy President of the CAS Appeals Division to decide the case pursuant to Article R50 of the CAS Code was constituted as follows:

Sole Arbitrator: Dr Jan Räker, Attorney-at-law, Stuttgart, Germany

30. On 4 November 2019, after an agreed extension, FIFA filed its Answer in accordance with Article R55 of the CAS Code.

31. On 7 November 2019, inter alia the Parties were invited to indicate whether they preferred a hearing to be held or for the Sole Arbitrator to issue the Award on the basis of the Parties’ written submissions.

32. On 8 November 2019, FIFA informed the CAS Court Office that it was of the opinion that a hearing in this case was not necessary.

33. On 14 November 2019, the Club informed the CAS Court Office that its preference was that the Sole Arbitrator issue the Award on the basis of the written submissions instead of an oral hearing.

34. On 9 December 2019, the CAS Court Office informed the Parties that they were granted a second round of written submissions.

35. On 11 December 2019, the CAS Court Office informed the Parties that the Sole Arbitator, taking into consideration the Parties’ positions with respect to a hearing, had decided not to hold a hearing in this matter further to Article R57 of the CAS Code and that the second round of submissions was granted in lieu of a hearing.

36. On 13 January 2020, after several agreed extensions, the Appellant filed its Reply.

37. On 10 February 2020, after being invited to file its Response by the CAS Court Office, the Respondent stated that it shall abstain from filing a Response.

38. On 2 July 2020, the Respondent returned a duly signed copy of the Order of Procedure to the CAS Court Office.

39. On 7 July 2020, the Appellant returned a duly signed copy of the Order of Procedure to the CAS Court Office.

SUBMISSIONS OF THE PARTIES

40. The Appellant’s submissions may be summarized as follows:

• The jurisdiction of the CAS to decide upon the present matter is based on Article 58 of the FIFA Statutes and Article 64.5 of the 2017 edition of the FDC. In addition, the present appeal is admissible as it was initiated within the time limit provided under Article R51 of the CAS Code.

• As to the applicable law, the Appellant considers that, pursuant to Article R58 of the CAS Code in conjunction with Article 57.2 of the FIFA Statutes, the Sole Arbitrator should apply the regulations of FIFA, mainly the FDC, and alternatively, if necessary, Swiss law to the merits of the case-at-hand.

• In addition, the Appellant argues that in accordance with the jurisdiction of the Swiss Federal Tribunal (“SFT”) and of CAS, CAS can declare itself to be competent to deal with issues relating to the Treaty on the Functioning of the European Union (“TFEU”), which the Appellant considers to be applicable law. Furthermore, the Appellant argues that in accordance with Article 186 para. 1 of the Swiss Private International Law Act (“PILA”), CAS shall consider cases and legal premises established by the European Commission, the EU White Paper-plus (which provides important considerations in relation to the specificity of sport), and also the European Convention on Human Rights (“ECHR”). The Appellant points to CAS jurisprudence which held that, while Article 6.1 of the ECHR was not directly applicable to decisions of sport governing bodies as such bodies are not public authorities which are bound to human rights, it was indirectly applicable in civil law proceedings before arbitral tribunals in the Swiss Confederation, which is a contracting party to the ECHR, insofar as the judges who shall check the arbitral awards will verify that these procedural guarantees, which form part of Swiss procedural public policy, were observed.

• The Appellant submits that, as a Swiss association registered under Article 60 of the Swiss Code of Obligations (“SCO”), FIFA shall comply with the terms and conditions established in its own statutes. In light of FIFA’s public statement to promote and respect human rights, the Appellant also considers that certain premises and principles established in international treaties on human rights as applicable during proceedings of the FIFA DC.

• Within the statutes of FIFA, the Appellant considers it obvious that the FIFA legislator wanted to limit the regulatory and decisional freedom of its decision-making bodies, which are not entitled to render decisions which violate the regulations established by FIFA.

• The Appellant asserts that the fulfilment of the aforementioned legal principles was also a matter of good governance, which is only achievable with the necessary transparency. With regards to the importance of transparency, the Appellant points to Article 15 of the TFEU and the Decision of the European Court of Human Rights in the matters Pechstein and Mutu. Further, the Appellant remarks that FIFA was also one of the signatories of the EU Transparency Register.

• As to the merits, the Appellant considers that the Appealed Decision violates the legal principles of proportionality and legality.

• Regarding the legal principle of proportionality, the Appellant points out that in accordance with Article 190 para. 2 lit. e. of the PILA, arbitral awards may be set aside by the SFT if an award is incompatible with public policy. The Appellant further asserts that, among the legal principles which are part of public policy, is the principle of proportionality, which consists of three components: (i) adequacy, i.e. if a measure is generally appropriate to achieve or contribute towards a goal; (ii) necessity, i.e. that there is no less incisive measure that would be equally adequate to achieve a goal; and (iii) proportionality stricto sensu, i.e. that the measure and its effects must be reasonable in relation to the goals pursued.

• The Appellant further points to Articles 101 and 102 of the TFEU, in which restrictions of competition and abuse of power are defined as “apply[ing] dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage”.

• The Appellant argues that, however, no sufficient transparency is exerted by FIFA in its application of Article 64 of the FDC, as the provision does not provide FIFA members with any clear parameters whatsoever regarding the level of sanctions over clubs or players, leaving it to the FIFA DC to develop jurisprudence under which the application of Article 64 of the FDC becomes sufficiently predictable. The Appellant further asserts that FIFA Circular Letter No. 1628, which was published on 9 May 2018 and which contains information about the FIFA DC’s future sanctioning policy in overdue payables cases, does not substitute or supersede the stipulations of Article 64 of the FDC, leaving it to the decision-making practice of the FIFA DC to develop a predictable and consistent jurisprudence. However, as the FIFA DC’s decisions so far have not been published, there has not been sufficient transparency, demonstrating a failure to comply with the principle of proportionality and the principle nulla poena sine lege scripta.

• In light of the aforementioned, the Appellant thus argues that the Appealed Decision contained a disproportionate financial sanction.

• In relation to the fine imposed by the FIFA DC, the Appellant argues that such fine of CHF 30,000 is disproportionate in amount, given that FIFA awarded fines of the same or a lower amount in five other cases, in which the outstanding amounts were sometimes significantly higher than in the case-at-hand. At the same time, in its deliberations on the sanctioned amount, the FIFA DC only stated the following in paragraph 12 of the reasons of the Appealed Decision: “In view of all the circumstances pertaining to the present case and by taking into account the outstanding amount due, the member of the Committee regards a fine amounting to CHF 30,000 as appropriate. This amount complies with the Committee’s established practice”.

• In line with the quote above, the Appellant continues, it is apparent that the outstanding amount due was a key element in the determination of the fine, whereas there was no clue as to how exactly the FIFA DC used the aforementioned factors in arriving at the CHF 30,000 sanction.

• By not providing any according explanation whatsoever, the FIFA DC clearly violated, amongst others, Article 94 of the FDC and the ECHR, as well as due process and the Appellant’s right to be heard.

• In light of the FIFA DC’s jurisprudence in other cases, with the sanction depending on the amount due and taking into account the FIFA DC’s established practice, the fine imposed on the Appellant should at most be CHF 8,040. The stipulated amount of CHF 30,000 is excessive, constituting an application of dissimilar conditions to equivalent transactions, which is an abuse of power in the meaning of Article 101 f. of the TFEU.

• While the Appellant admits that a CAS panel should only review and amend a decision of a FIFA disciplinary body in cases of arbitrariness, the Appellant insists that this current case is one of the cases in which such sanction was indeed imposed in an arbitrary manner.

• With regards to the ban from registering players, the Appellant argues that the FIFA DC failed to attend the prerequisites inherent of the principle of proportionality.

• To demonstrate this, the Appellant refers to the outstanding significance of revenue streams from player transfers for clubs in South America, and in particular for clubs in Brazil. With revenues much lower, compared to the revenues of European clubs, from broadcasting rights, sponsorship or ticket sales, South American clubs rely to a much bigger extent than European clubs on generating income from selling players to other clubs, preferably to Europe. While the Appellant concedes that the Appealed Decision does not prevent the Appellant from transferring players, the Appellant maintains that in order to be able to sell a player to another club, a club must have the opportunity to replace such player with another player, resulting in a massive sporting loss and the inability to recruit new youngsters who can be developed into quality players, and subsequently into transfer revenues.

• The Appellant argues that the goal pursued by the sanctioning system applied by the FIFA DC is and should not only be punitive, but should also be to permit the creditors to receive the outstanding amounts from the debtors. Within such circumstances, there is no point in imposing sanctions that will financially suffocate the debtors and sportively smash all of their objectives.

• Such a harsh sanction constitutes a violation of the personal right to economic development, as part of the Appellant’s personality rights, and therefore is a violation of Article 27 of the SCO.

• Furthermore, the Appellant argues that the FIFA DC should have made use of the available option to impose a points deduction as a milder sanction, which would, at least as a first step, be as effective to ensure payment, if not more, in light of South American clubs’ dependency of transfer revenues. To illustrate this argument, the Appellant points to five previous cases in which the FIFA DC only issued points deductions in cases of overdue payables, even though the outstanding amounts exceeded the outstanding amount in the case-at-hand.

• Finally, the Appellant argues that it should have been considered that the Appellant has never had to be sanctioned before by the FIFA DC and that in close timely proximity, the Appellant had settled other debts with other creditors, demonstrating the Appellant’s general willingness to comply with all of its obligations within the scope of its economic powers.

• In relation to paragraph 5 of the operative part of the Appealed Decision, the Appellant argues that this part of the Appealed Decision violates the principle of legality, namely the legal principles of nulla poena sine lege scripta, nulla poena sine lege stricta and ne bis in idem.

• In support of the aforementioned, the Appellant argues that, in line with established CAS jurisprudence, disciplinary sanctions must be based on a proper legal or regulatory basis, enacted beforehand, and that such sanctions must be predictable.

• The Appellant argues that such prerequisites are violated in the Appealed Decision, as in the respective part it renders the power to the creditor to demand the imposition of further sanctions on the Appellant, a right not foreseen in Article 64 of the FDC.

• The Appellant further argues that the imposition of a further sanction in line with para. 5 of the operative part of the Appealed Decision would violate the principle of ne bis in idem, as it would be a second sanction for the same offence, whereas such principle would not be violated if the Appealed Decision had from the outset contained a provision that a new and harsher sanction would apply in case of failure to pay the outstanding amount.

41. The Appellant submitted the following requests for relief:

“FIRST – To set aside, partially, the Appealed Decision;

SECOND – To confirm that the Appellant shall not pay a fine higher than CHF 6,410;

THIRD – To set aside in full the terms and conditions set out in paragraph 4 of item III of the Appealed Decision and replace it as follows:

‘4. If payment is not made to the Debtor and proof of such a payment is not provided to the secretariat to the FIFA Disciplinary Committee and to the Brazilian Football Association by this deadline, the (2) points will be deducted automatically by the Brazilian football association without a further formal decision having to be taken nor any order to be issued by the FIFA Disciplinary Committee or its secretariat’.

FOURTH - To set aside in full the terms and conditions of paragraph 5, item III of the Appealed Decision and replace it as follows:

‘If the Debtor fails to pay the amount due to the Creditor even after the complete serving of the transfer ban in accordance with paragraph 4 of item III above, the FIFA Disciplinary Committee, upon request of the Creditor shall ban the Debtor from registering new players, either nationally or internationally for two (2) entire and consecutive registration periods will be imposed on the Debtor as from the first day of the next registration period following the request made by the Creditor. Once the request is made through the FIFA Disciplinary Committee, the transfer ban will be implemented at national and international level by the Brazilian Football Association and FIFA respectively. The transfer ban shall cover all men eleven-a-side teams of the Debtor – first team and youth categories. The Debtor shall be able to register new players, either nationally or internationally, only from the next registration period following the complete serving of the transfer ban or upon the payment to the Creditor of the total outstanding amount, if this occurs before the full serving of the transfer ban. In particular, the Debtor may not make use of the exception and the provisional measures stipulated in article 6 of the Regulations on the Status and Transfer of Players in order to register players at an earlier stage’.

FIFTH – To confirm the terms and condition set out in paragraphs 6, 7 and 8 of the Appealed Decision;

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

SEVENTH – To order the Respondent to pay to the Appellant any contribution towards the legal and other costs incurred and regarding the ongoing proceedings in the amount of CHF 10,000 (ten thousand Swiss Francs)”.

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

• The jurisdiction of the CAS to decide upon the present matter is not contested.

• As to the applicable law, the Respondent asserts that mainly the 2017 version of the FDC shall be applicable, with Swiss law applied subsidiarily. The Respondent however denies that the TFEU is applicable, as the matter neither affected an entity based

within a member state of the EU nor issues which are related to competition law.

• The Respondent agrees that, per Article 57 par. 2 of the FIFA Statutes and Article R58 of the CAS Code, the regulations of FIFA, namely the FDC and subsidiarily Swiss law shall apply. The Respondent however opposes the applicability of EU law. The Respondent points out that none of the parties reside in the European Union and asserts that there is no close connection between the Appealed Decision and the TFEU. Finally, the Respondent argues that the matter is in no way related to competition law.

• The Respondent states that the “enforcement” mechanism created by FIFA in Article 64 of the FDC has been repeatedly confirmed by the CAS and the SFT, and that the Appellant was guilty of not respecting the PSC Tigres Decision, as confirmed in CAS 2017/A/5279, even though it had recently received a total of USD 4,000,000 more from player transfers than it spent.

• Contrary to the Club’s allegations, the Club has been pursuing its dilatory approach by appealing to CAS against sanctions imposed on the Club by the FIFA DC for failing to respect decisions in favour of other creditors several times. The current appeal is therefore only a bad faith attempt to delay the delivery of justice.

• The Respondent asserts that the FIFA DC did not violate the “predictability test” or the principle of legality.

• The Respondent agrees that at least to some extent the legal principle of nulla poene sine lege is applicable to disciplinary provisions and proceedings of sports associations. It further refers to previous CAS jurisprudence in which a so-called “predictability test” was applied, however without concretely specifying the requirements for such test.

• The Respondent argues that for the principles of predictability and legality to be respected, it is not necessary that the sanctioned stakeholder should know in advance the exact sanction that will be imposed. The Respondent further argues that it is not a violation of either the principle of transparency or predictability when the Respondent refers to the amount overdue as a criterion for the determination of a sanction and to the “Committee’s well-established practice”. Instead, by clearly stating a range of the amount of a possible fine and by mentioning the other sanctions that can be imposed additionally or alternatively, Article 64 of the FDC sufficiently alerts any offender of the possible sanction for a violation.

• Regarding the principle of transparency, the Respondent is of the opinion that such principle does not require the Respondent to publish all of the decisions taken by the FIFA DC, while at the same time pointing out that in addition to the decisions already available to the Appellant, further decisions were presented in the Respondent’s Answer and that all decisions of the FIFA DC taken since January 2019 are now available to the public on the Respondent’s website.

• Regarding the Appellant’s claim that its right to be heard was violated by the Appealed

Decision for insufficiently justifying the amount of the fine, the Respondent argues that such right does not comprise protection against a insufficient motivation of a decision, but rather being granted the opportunity to present one’s case to the respective judicial body, which was by all means possible for the Appellant in the caseat-hand.

• The Respondent further pleads that the application of FIFA Circular No. 1628 also does not render the Appealed Decision illegal. The Respondent points out that FIFA Circular No. 1628 by no means contravened the previously existing content of Article 64 of the FDC, but that its content was rather to alert all stakeholders to a change in the sanctioning policy of the Respondent that would apply shortly after the publication of the circular letter.

• The Respondent takes the position that, in accordance with long-standing CAS practice, a disciplinary decision of a private association shall be amended only in cases in which the relevant judicial body is found to have exceeded the margin of discretion accorded to it, i.e. only in cases in which the decision was taken arbitrarily.

• The Respondent pleads that the decision was not only taken in a non-arbitrary way, but that the sanctions imposed on the Appellant were proportionate.

• Regarding the imposed fine, the Respondent argues that the most important criterion for its determination must be the amount overdue. At the same time the Respondent acknowledges that the fine may not put too much of a burden on the offender in order not to yield counterproductive effects on the debtor’s ability to settle its debt to the creditor.

• Regarding the specific amount of the fine, the Respondent firstly contradicts the statement of fact concerning the amounts overdue in the cases presented by the Appellant, namely that the amounts overdue were significantly lower in the cases in which a CHF 25,000 fine was imposed, and secondly tried to substantiate its claim that the imposition of a CHF 30,000 fine was well in line with the FIFA DC’s wellestablished practice by presenting a range of further cases in which a CHF 30,000 fine was imposed and in which the amounts overdue were mostly lower than in the caseat-hand.

• Regarding the proportionality of the transfer ban, the Respondent first points to the wording of Article 64 of the FDC which allows for a transfer ban to be imposed additionally or alternatively to a fine or a points deduction.

• The Respondent further points to its usual sanctioning practice, under which, in line with the previous notice in FIFA Circular No. 1628, it is common that a transfer ban is imposed on top of a fine in case of debts in the amount-at-hand. The Respondent argues that the publication of a circular letter was sufficient to announce the change in the sanctioning policy of the FIFA DC as it occurred in 2018.

• The Respondent further provides examples of FIFA DC decisions in other cases in

which a transfer ban for two registration periods was since imposed in cases in which the amount overdue was comparable or lower.

• Next, the Respondent argues that a transfer ban is a sanction with a close material connection to the breach committed by the Appellant, which signed players without paying for them, thereby affecting the integrity of the competition vis-à-vis other clubs who did not strengthen their teams with players they were unable to afford. This was even more true when taking into account that the ban would only apply if the overdue amount remained unpaid and lifted immediately as soon as it was paid.

• Finally, in view of the Appellant’s claim of a violation of the legal principle ne bis in idem, the Respondent argues that such principle is not violated as – contrary to the Appellant’s understanding of the respective provision in the operative part of the Appealed Decision – it is not in the power of the creditor to impose a further sanction on the Appellant and that such power remains with the FIFA DC instead, which has not yet rendered an according decision anyway, leaving the entire issue moot in this case.

43. The Respondent submitted the following requests for relief:

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

b. To confirm the decision 190310 PST BRA ZH rendered by the member of the FIFA Disciplinary Committee on 28 May 2019;

c. 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”.

JURISDICTION

44. Article R47 of the CAS Code provides as follows:

“An appeal against the decision of a federation, association or sports-related body may be filed with the CAS insofar as the statutes or regulations of the said body so provide or as the parties have concluded a specific arbitration agreement and insofar as the Appellant has exhausted the legal remedies available to it prior to the appeal, in accordance with the statutes or regulations of the said sports-related body”.

45. The jurisdiction of CAS derives from Article 58 (1) of the FIFA Statutes (2019 edition) which reads:

“Appeals against final decisions passed by FIFA’s legal bodies and against decisions passed by confederations, member associations or leagues shall be lodged with CAS within 21 days of receipt of the decision in question”.

46. The FIFA DC is a legal body of FIFA. The jurisdiction of the CAS is not contested by either Party and is also confirmed by the Parties’ signing of the Order of Procedure.

47. It follows that CAS has jurisdiction to decide on the present dispute.