Suphanburi FC v. Michael Seroshtan

V. JURISDICTION

42. The jurisdiction of CAS derives from Article 58(1) FIFA Statutes, which determines that “[a]ppeals 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” and Article R47 of the CAS Code.

43. The jurisdiction of CAS is not contested and is further confirmed by the Order of Procedure duly signed by both Parties.

44. It follows that CAS has jurisdiction to adjudicate and decide on the present dispute.

VI. ADMISSIBILITY

45. The appeal was filed within the deadline of 21 days set by Article 58(1) FIFA Statutes. The appeal complied with all other requirements of Article R48 of the CAS Code, including the payment of the CAS Court Office fee.

46. It follows that the appeal is admissible.

VII. APPLICABLE LAW

47. Article R58 of the CAS Code provides as follows:

“The Panel shall decide the dispute according to the applicable regulations and, subsidiarily, to the rules of law chosen by the parties or, in the absence of such a choice, according to the law of the country in which the federation, association or sports-related body which has issued the challenged decision is domiciled or according to the rules of law that the Panel deems appropriate. In the latter case, the Panel shall give reasons for its decision”.

48. Article 57(2) of the FIFA Statutes provides the following:

“The provisions of the CAS Code of Sports-related Arbitration shall apply to the proceedings. CAS shall primarily apply the various regulations of FIFA and, additionally, Swiss law”.

49. In view of the choice of the Parties to refer their dispute to the FIFA DRC, the Sole Arbitrator finds that the Parties accepted the applicability of Article 57(2) of the FIFA Statutes. In accordance with this provision, the regulations of FIFA are primarily applicable and, if necessary, additionally, Swiss law.

VIII. MERITS — A. Preliminary issue: the extent of the Sole Arbitrator’s power of review

50. Before assessing the merits of the dispute and taking into account the submissions and requests for relief filed, the Sole Arbitrator considers necessary to clarify, for the avoidance of doubt, that in this instance, the Sole Arbitrator cannot entertain any new claim the Respondent may have filed - if any - against the Appealed Decision and can only consider mere statements of defence. The reason for this is that, as is well-established, it follows from Article R55 of the CAS Code that the Respondent to an appeal procedure is not entitled to file any counterclaim to challenge any or all of the rulings of the Appealed Decision, since in order to file any claims itself, the Respondent would have to file an independent appeal against the decision in question, within the legal term established. This has been established by consistent CAS jurisprudence (see CAS 2017/A/5481, CAS 2016/A/4852 and CAS 2016/A/4623 & 4624) and later endorsed by the Swiss Federal Tribunal (ATF 4A_10/2010).

51. In this context the Sole Arbitrator refers to requests for relief 2.2 and 2.3 submitted by the Respondent, which read as follows:

“2.2. Determine that the Appellant, has prematurely terminated the contract with the Respondent without Just Cause , in a severe and unacceptable manner;

2.3. Determine that the Appellant must pay the Respondent compensation for breach of contract in the amount of USD 256,908 and more ”.

52. On its face, the above quoted requests could be read as if the Respondent were introducing “new” claims. However, having carefully analysed and interpreted the respective requests, in the Sole Arbitrator’s opinion, requests for relief 2.2. and 2.3., while somehow delicately phrased, in essence, the Respondent requests for the appeal to be dismissed, respectively for the Appealed Decision to be confirmed in its relevant parts. In the Sole Arbitrator’s view this is also confirmed when considering the remainder of the Respondent’s submission, as in another section of his Answer, the Respondent stipulated as follows:

“112. The above requires that all the Appellant’s grounds for appeal should be rejected.

113. The Honorable CAS is hereby requested to dismiss and reject the Appellant’s Appeal by means of fully concurring with the FIFA DRC Decision (i.e. the amount of USD 256,908 to be paid by the Appellant to the Respondent).

114. Without derogating from the above, the Honorable CAS is further requested to determine that the Appellant must compensate the Player in respect of all its expenses incurred as a result of this procedure, inter alia, fees, legal expenses etc.”.

53. Having said this, and again for the avoidance of doubt, any request for relief by the Respondent which goes beyond a confirmation of the Appealed Decision, if any, is dismissed a limine, not because the Respondent did not clearly include it in his claims for relief, but rather because such relief is not admissible under Article R55 of the CAS Code.

B. The main issues

54. The dispute to be decided by the Sole Arbitrator concerns essentially the legality of the Employment Contract termination by the Club. The dispute, therefore, focuses on the satisfaction of the conditions established by the “relegation clause” for such termination to be made.

55. Initially, the Sole Arbitrator notes that most of the factual circumstances pertaining to the Employment Contract between the Appellant and the Respondent are essentially undisputed by the Parties. In rendering this Award, the Sole Arbitrator has, therefore, taken into account the following non-exhaustive list of uncontested facts and considerations:

- The Employment Contract entered into force on 1 July 2019 and was supposed to last until 30 November 2019;

- The Employment Contract was freely negotiated by the Parties, the Player was assisted in the negotiation by his agent, who made amendments to the text before it was signed by the Player;

- On 26 October 2019, the Club played its last match in the season 2019 and, according to the number of points accumulated during the season, it could achieve only the 14th position out of 16 in the standing table. Accordingly, the Club was one of the three teams which were relegated to the Thai League 2 for sporting reasons at the end of the season as per Article 15.1 of the Competition Regulations Toyota Thai League 2019;

- On 28 October 2019, in accordance with Article 15 of the Employment Contract, the Club sent to the Player via email the Termination Letter dated 27 October 2019, confirming in writing the termination of the Employment Contract;

- On 25 November 2019, the Thai League announced its decision to allow the Club to participate in the competition of the Thai League 1 for the 2020 season in order to replace

another club, which had withdrawn from the competition – PTT Rayong, which had obtained the 11th position in the standing table season 2019;

- On 16 December 2019, the Player, via his legal representative, sent an official letter to the Club demanding to revoke the Termination Letter and to issue a statement that his Employment Contract was still in force until 30 November 2020 due to the fact that the Club remained competing in the Thai League 1 (thus, referring to the extension clause of the Employment Contract, cf. Article 4);

- On 6 January 2020, the Club informed the Player that the Employment Contract was definitively terminated based on the relegation clause and that the Club had no intention to revoke its decision;

- On 7 January 2020, the Player signed an employment contract with Hapoel Haifa FC valid as of 7 January 2020.

56. However, the Parties do not agree on the following:

1. The Appellant insists that:

- The Club was relegated at the end of the Thai League 1 Competition season 2019, having finished on 14th place in the standing table, i.e. by “ordinary sporting principle” and based on the number of points accumulated; this stands as a fact nowadays;

- The fact that almost one month after the valid termination of the Employment Contract, the Thai League, by means of an administrative decision and due to the occasional withdrawal of another higher ranked club, the Appellant was admitted to participate in the Thai League 1 does not amount to constitute a legal basis for a backdated prolongation of the Employment Contract for the season 2020. The amount of points earned by the Club during the 2019 season had remained unchanged and the position of the Club in the standing table due to sporting reasons did not change – the Club was still, as a matter of fact, relegated on sporting reasons; by the time of Club’s reinstatement the Employment Contract was already validly terminated with just cause.

2. The Respondent, in turn, insists that:

- Since the Club, de facto, was not relegated and remained in the Thai League 1, this served as legal basis for prolongation of the Employment Contract for the season 2020 as foreseen by Article 4 of the Employment Contract – i.e., the extension clause;

- His Employment Contract was terminated prematurely without just cause, the Club did not want to continue the labour relationship with him without substantiating its position and, therefore, compensation is due to the Player;

- The FIFA DRC rightly awarded him compensation for breach of his Employment Contract by the Club because the “extension clause” prevails over the “relegation clause”.

57. Therefore, the main issues to be resolved by the Sole Arbitrator are:

a. Did the Employment Contract come to an end immediately after the last match of the 2019 season and based on the relegation clause due to ordinary sporting reasons as the Club had been relegated?

b. If (i) is answered in the negative, what are the consequences thereof?

These issues will be considered in turn.

a. Did the Employment Contract come to an end based on relegation clause due to ordinary sporting reasons immediately after the last match of the 2019 season due to the Club’s relegation?

58. The Sole Arbitrator shall start the assessment of the quaestio litis by analysing Article 15 of the Employment Contract, which stipulates as follows:

“This Contract will terminate without liability for either party if the Club’s senior men’s first team is relegated from the Thai League 1 for ordinary sporting reasons. On such relegation, this Contract will terminate with effect from the end of the month in which the Club’s senior men’s played its last match” [emphasis added].

59. The Sole Arbitrator notes that the wording of this clause is very clear – as soon as the team is relegated at the end of the season for ordinary sporting reasons - the Employment Contract is terminated without any liability for either party. This provision is drafted strictly in line with the provision of Article 154 Swiss Code of Obligations (“Swiss CO”), according to which: “A contract whose termination is made dependent on the occurrence of an event that is not certain to happen lapses as soon as that condition is fulfilled. As a rule, there is no retroactive effect” [emphasis added].

60. To start with, the Sole Arbitrator observes that insertion into a contract of a “relegation clause” is a popular tool widely used in football by both - clubs and players - with the aim to protect: a) the club to suffer, as a result of relegation, from wage burdens which would supersede its financial capability. Generally, there is a justifiable interest to adapt the wage structure to the changing sporting and financial environment in the second division, which also ensures that players would receive their salary; b) the players’ sports career, in that they would not be obliged, in case of relegation of their actual club, to play in lower-level competitions. Therefore, these clauses can be deemed as a valid way to protect the mutual interests of both parties of the contract.

61. It shall be recalled that there are two different types of relegation clauses:

1) relegation clauses stating that the contractual relationship of the parties automatically ends in the case of relegation of the club, or otherwise provide both parties with the right to terminate the employment contract in case of relegation. Not only clubs, but also the

players benefit from these kinds of relegation clauses. That is to say, players themselves could also find it desirable to include such a clause in their employment contracts. This view is supported by CAS 2008/A/1447, para. 38, stating that “relegations clauses are mainly a way protecting the players’ careers, as their employment opportunities and market values would be reduced by playing in lower divisions during their short-term careers”.

2) on the other hand, relegation clauses which do not automatically lead to the termination of the contractual relationship in case of relegation, but only provide one party with the opportunity to terminate the employment contract without any regulation of the compensation, if any, for the other party. This kind of clauses bears the risk of providing an unbalanced right to the discretion of one party only, without having any interest of any kind for the other party.

62. Therefore, the Sole Arbitrator needs to analyze the balance of interest in the clause agreed upon between the Parties, taking into account the specific circumstances of the present case. Thus, in the present case, Article 15 of the Employment Contract foresaw termination of the Employment Contract as soon as the Club was relegated for ordinary sporting reasons, without liability for either party. The above-mentioned stipulated condition is an expression of party autonomy and based on a condition that is not under the control of the Parties or a third party – it is depending on other circumstances than the will of a party to the employment contract. In fact, it has to be presumed that the will of clubs and players is always to avoid relegation. The fulfillment of the condition of relegation is thus solely depending on sporting circumstances. In other words, the condition of relegation is a casual condition, not a potestative condition. Thus, this clause belongs to the type 1) as outlined above – it is not potestative and reciprocal, and therefore, valid.

63. Both Parties confirmed at the hearing that the relegation clause was inserted by default to the employment contracts of all foreign players hired by the Club and was equally triggered by the Club in other numerous instances.

64. Moreover, the Parties do not disagree in that the conclusion of the Employment Contract, such as the negotiation and exchange of comments was performed freely by both Parties, the Player was assisted by his agent and the Employment Contract was not unilaterally imposed by one party on the other; in addition, the Employment Contract is signed by both Parties on each of its pages, including on the last page. The Player did not claim any misunderstanding of the said provision at the time of negotiating and signing his Employment Contract. He also did not do so after the Employment Contract was terminated by the Club on 28 October 2019, with effect as of 31 October 2019. It is only on 16 December 2019 that the Player contacted the Club regarding the termination.

65. The Sole Arbitrator turns to Article 18(1) of the Swiss CO, which states as follows: “When assessing the form and terms of a contract, the true and common intention of the parties must be ascertained without dwelling on any inexact expressions or designations they may have used either in error or by way of disguising the true nature of the agreement”.

66. Thus, in the case at hand, the Employment Contract contains a provision, under which the contract will terminate if the team is relegated for ordinary sporting reasons. It is further clarified that the “Contract will terminate with effect from the end of the month in which the Club’s senior men’s team played its last match” [emphasis added].

67. In accordance with this provision, the Sole Arbitrator notes that indeed, the application of Article 15 of the Employment Contract was clearly very limited in time – it would only be triggered - after the last match of the season played by the team (i.e., 26 October 2019) and before the end of the respective month, i.e., October 2019. The effective termination date according to this provision is, therefore, 31 October 2019.

68. In terms of facts, it is undisputed between the Parties that, given the situation as it existed at the time of the last match of the season, the Club was relegated to the lower league for sporting reasons. Thus, the Employment Contract was validly and with just cause terminated as of 1 November 2019, last working day being 31 October 2019, and this was confirmed by the Club in its letter to the Player of 27 October 2019.

69. This was the common intention of the Parties at the moment of the signing of the Employment Contract, and this is how things stood at the moment in time when the relegation clause could possibly be triggered, and in the absence of any contrary evidence, this clause has the binding force of the Parties’ agreement.

70. Now the Sole Arbitrator turns to the analysis of the “extension clause” laid down in Article 4 of the Employment Contract, stipulating: “The Club agreed that contract extension clause starting from 1st December 2019 and ending on 30th November 2020 will automatically extend should the Club remain competing in the Thai League 1 for the Season 2020” [emphasis added].

71. In accordance with Article 151 of the Swiss CO, “A contract is conditional if its binding nature is made dependent on the occurrence of an event that is not certain to happen. The contract takes effect as soon as this condition precedent occurs, unless the parties clearly intended otherwise”.

72. In the opinion of the Sole Arbitrator, the text of Article 4 of the Employment Contract is unambiguous – the extension of the Employment Contract is conditional upon whether the Club remained or not in the competition of Thai League 1, it is not automatic. What, in the Sole Arbitrator’s view, was meant as “automatic” is that there was no necessity for the Parties to sign any additional document in order to prolong the Employment Contract for the second season in case the Club, immediately following the last match of the season, remained in the Thai League 1 based on its results.

73. As a matter of fact, the Club did remain in the Thai League 1, but only as of 25 November 2019 and as a result of reinstatement, not for the sporting reasons. Furthermore, as not disputed by either of the Parties, it remained in the Thai League 1 because occasionally it replaced another club which had withdrawn from the Thai League 1 and after the Employment Contract of the Player had already been validly terminated, as of 31 October 2019, in accordance with Article 15 of the Employment Contract. Therefore, the extension clause, under these circumstances,

could not be triggered anymore. In terms of timing, the application of the relegation clause superseded the application of the extension clause of the Employment Contract, and, in accordance with Article 151 Swiss CO, such termination has no retroactive effect.

74. As regards the case of the player Mr Dellatorre, which both Parties referred to in their respective submissions, to start with the Sole Arbitrator notes that the dispute between Mr Dellatorre and the Club resulted from the same factual background as in the present case, i.e., the Club had been relegated at the end of the 2019 season for sporting reasons and was later on reinstated into the Thai League 1 due to the withdrawal from the Thai League 1 by another club. Furthermore, what is in common between the present case and the case of Mr Dellatorre is the relegation clause contained in the employment contract of both the Appellant and Mr Dellatorre with the Club. In the view of the Sole Arbitrator, however, the wording of the extension clause in the respective employment contract of the two players is irrelevant, since it did not come into play in either of the two cases. This is due to the fact that – the application of the relegation clause, chronologically, came first, validly bringing an end to the respective employment contract. Put differently, the application of the relegation clause superseded any potential application of the extension clause (irrespective of its exact wording). In this context the Sole Arbitrator notes, without, for the avoidance of doubt, however, feeling in any way bound by this, that also the FIFA DRC, in the case of Mr Dellatorre, came to the conclusion that, following the relegation of the Club at the end of the 2019 season, the employment contract with Mr Dellatorre had been terminated due to the relegation clause, and that therefore, when looking at the “chronology of the events in the present matter”, “logically the contract could not be extended”.

75. Furthermore, the Sole Arbitrator finds it more likely than not that the Player had genuinely considered his Employment Contract as validly terminated because he was – at the relevant moment in time – of the understanding that this was indeed what was foreseen under Article 15 of the Employment Contract. Indeed, on 26 October 2019, the Club played its last match and based on the points obtained, and therefore for sporting reasons, finished in a position which did not allow it to remain in the Thai League 1. Accordingly, Article 15 of the Employment Contract was automatically triggered, and the Club had timely confirmed this in its letter to the Player of 28 October 2019. For the avoidance of doubt, in fact, it shall be deemed that the Employment Contract came to a natural expiry at the end of the season 2019, without the Respondent being in need to formally proceed to the termination.

76. The Player did not provide any evidence to establish that the real, common understanding of both Parties, at the time of the negotiation regarding the relegation clause, was that it was not limited timewise in the sense of its application and that “ordinary sporting reasons” did indeed mean any kind of circumstances e.g., if the Club remained to play in the Thai League 1, for example, like in this case, because it replaced another club due to latter’s withdrawal at a later stage.

77. The relegation clause foresaw that the Employment Contract only ended after the last match of the season and before the end of the respective month, i.e., 31 October 2019. On the contrary, the Sole Arbitrator is of the opinion that by issuing, on 28 October 2019, its Termination Letter to the Player with the very clear wording regarding the basis for the Employment Contract

termination, the Appellant, in due time and in good faith, confirmed its understanding regarding the applicability of Article 15 of the Employment Contract.

78. Besides this, the Sole Arbitrator finds that also the subsequent behaviour of the Parties (i.e., absence of any correspondence by the Player until 16 December 2019) points in the direction of concluding that the Player, in good faith, had understood that his Employment Contract was lawfully terminated and indeed, by that time was already seeking for new employment. Therefore, any further claims of the Player, more than one month after the Employment Contract termination, are considered being made against the principle of good faith.

79. This is also confirmed by the text messages, provided by the Player himself, allegedly exchanged between the Player and various Club representatives, that the Player was seeking to continue his labour relationship with the Club since the beginning of November 2019, thus being clearly of the understanding that his contract was already terminated.

80. The Sole Arbitrator feels necessary to outline, that as it appears from the evidence on the record - there was no written contact between the Club and the Player - until when on 25 November 2019, the Thai League announced its decision to replace PTT Rayong, due to the latter’s withdrawal. The Player could not effectively explain how and when he got to know about this official statement of the Thai League.

81. The Player, as evidenced by a stamp in his passport, returned back to Thailand on 9 December 2019. However, he did not produce any evidence to prove that he had informed the Club about his arrival and its purpose, he did not explain why he returned to Thailand on 9 December 2019 only, whether he intended to continue with his performance under the Employment Contract for the 2020 season, performance which, in case the Employment Contract would have been extended, quod non, should have started running from 1 December 2019. From the Player’s messages allegedly exchanged with the Club’s secretary, the Sole Arbitrator understands that the real purpose of the Player’s return was to collect his salary for October 2019, which was paid to him in cash, and to free the house he had rented.

82. Only on 16 December 2019, when the Employment Contract was already validly and effectively terminated as of 31 October 2019, the Player officially contacted the Club and started insisting on the contract’s prolongation in view of the fact that the Club had “remained” in the Thai League 1. Already in that letter the Player informed the Club that he was going to start legal proceedings in case the Club would not revoke its Termination Letter.

83. While claiming in his letter of 16 December 2019 that he had not directly received the Termination Letter, sent to him by email (to the Player’s email address, which is indicated in all official documents on the record), at the hearing the Player remembered that he had retrieved the letter from his spam folder some weeks after it had been sent, which means, in any case, not later than at the end of November 2019. This also does not explain why his official letter to the Club regarding the prolongation of the Employment Contract was sent only two weeks later, i.e., on 16 December 2019.

84. The Player, during the hearing, was not able produce evidence of when he left Thailand following the termination of his Employment Contract and could not remember the circumstances and the date on which he had actually left Thailand in November 2019. He could have provided such information at the time when he produced a copy of his passport pages showing a stamp for entry to Thailand on 9 December 2019.

85. Notably, the Player submitted screenshots of his alleged chats with the Club’s secretary, and apparently, already on 13 December 2019 he was discussing his situation regarding his upcoming future employment in Israel. However, to the Sole Arbitrator the screenshots provided appear to be selective – no messages exchanged before 5 December 2019 were produced by the Player.

86. Therefore, the submissions and arguments presented by the Player in an attempt to support the Appealed Decision, namely that the Employment Contract was terminated by the Club without just cause cannot be taken into account, as it is clear to the Sole Arbitrator that the relegation clause with its clear wording and a limited period of time of application was lawfully triggered by the Club’s relegation for sporting reasons, the Employment Contract was terminated as agreed by the Parties, which the Player accepted at the relevant time.

C. Conclusion

87. Therefore, the Sole Arbitrator concludes that the Club had validly relied on the relegation clause, having confirmed this to the Player shortly after it became clear that it would be relegated, and based on the circumstances and facts as they stood at the relevant point in time. It was not possible for the Employment Contract, which had already validly terminated as of 31 October 2019, to be “renewed” after 25 November 2019.

88. Finally, the conclusion above regarding the failure of the Player to himself file an appeal to CAS against the Appealed Decision as well as the fact that, as outlined above, the Club had validly confirmed the termination of the Employment Contract based on the relegation clause, makes it unnecessary for the Sole Arbitrator to consider any other requests submitted by the Parties.

89. Any other and further claims or requests for relief are therefore dismissed.