Sport Lisboa e Benfica Futebol SAD v. Fédération Internationale de Football Association (FIFA)

I. INTRODUCTION

1. This appeal is brought by Sport Lisboa e Benfica SAD (“Benfica” or the “Appellant” or the “Club”) against the Fédération Internationale de Football Association (“FIFA” or the “Respondent”). It aims to challenge FIFA Appeal Committee’s decision of 8 April 2021 to sanction Benfica with a fine of CHF 40,000 and a warning for breaching Article 18bis of the FIFA Regulations on the Status and Transfer of Players (“RSTP”) (third-party influence), and Article 4 (3) of Annexe 3 RSTP (clubs’ duty of information during transfers).

VII. JURISDICTION

35. 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 CAS if the statutes or regulations of the said body so provide or if the parties have concluded a specific arbitration agreement and if the Appellant has exhausted the legal remedies available to it prior to the appeal, in accordance with the statutes or regulations of that body”.

36. Articles 53.3, 56.1 and 57.1 of the FIFA Statutes (May 2021) respectively provide:

Art. 53.3: “Decisions pronounced by the Appeal Committee shall be irrevocable and binding on all the parties concerned. This provision is subject to appeals lodged with the Court of Arbitration for Sport (CAS)”; Art. 56.1: “FIFA recognises the independent Court of Arbitration for Sport (CAS) with headquarters in Lausanne (Switzerland) to resolve disputes between FIFA, member associations, confederations, leagues, clubs, players, officials, football agents and match agents”; and Art. 57.1: “Appeals against final decisions passed by FIFA’s legal bodies […] shall be lodged with CAS within 21 days of notification of the decision in question”.

37. In addition, the Parties have expressly confirmed the jurisdiction of the CAS by signing the Order of Procedure. It follows from all the above that CAS has jurisdiction to decide on the present dispute.

VIII. ADMISSIBILITY

38. Article R49 of the CAS Code provides as follows:

“In the absence of a time limit set in the statutes or regulations of the federation, association or sports-related body concerned, or in a previous agreement, the time limit for appeal shall be twenty-one days from the receipt of the decision appealed against. The Division President shall not initiate a procedure if the statement of appeal is, on its face, late and shall so notify the person who filed the document”.

39. Article 57 of the FIFA Statutes (see supra) provides a time limit of 21 days after notification to lodge an appeal against a decision adopted by one of FIFA’s legal bodies, such as the FIFA Appeal Committee.

40. The Appealed Decision was notified with grounds to the Appellant on 3 June 2021. The Appellant timely lodged its Statement of Appeal with the CAS Court Office on 24 June 2021, i.e. within the twenty-one days allotted under the aforementioned provision. The Respondent raised no objections as to admissibility issues. It follows that the appeal is admissible.

IX. APPLICABLE LAW

41. 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 the Panel deems appropriate. In the latter case, the Panel shall give reasons for its decision”.

42. Article 56.2 of the FIFA Statutes so provides:

“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, subsidiarily, Swiss law”.

43. Accordingly, the present disciplinary dispute must be decided in accordance with the applicable FIFA rules and regulations, such as in particular the RSTP and the FDC; subsidiarily, the Panel shall apply Swiss law.

44. Article 18bis RSTP (January 2020 edition, which was in force when the Agreement was signed) provides as follows:

“1. No club shall enter into a contract which enables the counter club/counter clubs, and vice versa, or any third party to acquire the ability to influence in employment and transfer-related matters its independence, its policies or the performance of its teams. 2. The FIFA Disciplinary Committee may impose disciplinary measures on clubs that do not observe the obligations set out in this article”.

45. Article 4 (3) of Annexe 3 RSTP states that “Clubs […] must provide the following compulsory data when creating instructions, as applicable: […] Declaration on third-party payments and influence […]”.

46. Finally, the relevant articles of the FDC (June 2019 edition, as per the same reasoning) will be discussed further, in relation to the sanction. No attention will be paid to its previous version, which seem to have been mistakenly quoted by FIFA in its written submissions, and that are not rooted in FIFA disciplinary bodies’ decisions.

X. MERITS

47. The main task of the Panel is to determine whether Benfica violated Article 18bis RSTP when it entered into the Agreement. In this respect, Benfica argues that this provision has been unclear and remained unapplied until recently, and thus cannot be held against it. In addition, it maintains that recent CAS jurisprudence shows that the Agreement is lawful. On the other hand, FIFA contends that Article 18bis RSTP has always had a clear and straightforward application and was violated by Benfica when entering into the Agreement. Therefore, in order to establish whether Benfica acted in breach of Article 18bis RSTP, the Panel should first assess the content of the prohibition enshrined in such provision and then examine whether it was violated by the Appellant. If the violation stands, even partially, the Panel then has to determine whether Article 4 (3) Annexe 3 RSTP was also infringed, and whether the sanctions imposed by the FIFA Disciplinary Committee and confirmed in the Appealed Decision remain appropriate or need amending.

A. On the conduct prohibited under Article 18bis RSTP

48. The Parties disagree as to the reach and interpretation of Article 18bis RSTP.

49. On the one hand, Benfica submits that Article 18bis RSTP was scarcely applied by FIFA between its entry into force (2008) and the year in which Benfica entered into the Agreement (2020), thereby leaving clubs with no guidance whatsoever as to its actual scope of application and binding effect. It contends that the rule has remained unclear until CAS’ recent jurisprudence, which now interprets the concept of “ability to influence” very narrowly. It argues that, as per the “predictability test” and doctrine of estoppel, an unclear or previously non-enforced provision may not lead to the application of any sanction.

50. On the other hand, FIFA insists that the rule is clear and, regardless of the fact that there was no application of the rule in its first years, it has always been mandatory on clubs and it was violated in the case at stake. It sustains that the wording of the provision is intentionally broad in order to encompass all kinds of undue influence on clubs but, in any case, its wording is clear.

51. In order to resolve that disagreement, the Panel must preliminarily establish whether the wording and application of Article 18bis RSTP are flouting the “predictability test” and doctrine of estoppel because, if this were so, the Panel should set aside right away the sanctions imposed by FIFA on the Appellant. If not, the Panel should examine this provision in more depth, and ascertain whether and to which extent the Appellant breached it, and what are the consequences thereof.

a. Violation of the predictability requirement and doctrine of estoppel

52. The Appellant challenges the applicability of Article 18bis RSTP to its conduct on the basis that such provision does not conform to the principle of predictability, is ambiguous and should be interpreted against its drafter (“contra proferentem”). It also suggests that the Respondent had never enforced it until recently, and is now estopped from applying it.

53. The Panel concurs with the Appellant that CAS jurisprudence requires, for a sanction to be imposed, that sports disciplinary rules be sufficiently clear and precise in proscribing the misconduct with which someone is charged, pursuant to the principle nulla poena sine lege clara (principle of predictability). As a matter of course, CAS panels have held that sports organisations may not impose sanctions without a proper legal or regulatory basis and that such sanctions must satisfy a predictability test (see CAS 2020/A/7008 & 7009, §53, and the references therein).

54. However, the Panel confirms, in compliance with that jurisprudence – which already involved the Appellant –, that Article 18bis RSTP is sufficiently clear and precise in prohibiting clubs from entering into contracts which enable other parties to acquire the ability to influence, in employment and transfer-related matters, the independence, policies or teams’ performances of those clubs. This leaves no room for a contra proferentem interpretation (CAS 2020/A/7008 & 7009, §§49 and 54).

55. The Panel recalls that a rule that is broadly drawn, such as Article 18bis RSTP, does not necessarily lack sufficient legal basis because of that character. Indeed, “disciplinary provisions are not vulnerable to the application of that rule [nulla poena sine lege clara] merely because they are broadly drawn. Generality and ambiguity are different concepts”. Therefore, a sports governing body is certainly entitled to “draft a disciplinary provision of a reach capable of embracing the multifarious forms of behaviour considered unacceptable in the sport in question” (CAS 2014/A/3516, §105, quoted approvingly by

56. Thus, the possibility for Article 18bis RSTP to catch an unspecified variety of contracts as providing a party with the ability to unlawfully influence clubs’ conduct does not mean that it lacks sufficient legal basis and predictability. Disciplinary sanctions imposed by sports governing bodies must only conform to civil law standards, which are often inherently vague and reveal their full meaning on the basis of judicial application (CAS 2020/A/7008 & 7009, §56, which refers to Swiss Federal Tribunal (SFT)’s Judgement of 31 March 1999,5P.83/1999, §8b).

57. The fact, essentially undisputed by FIFA, that for some years the FIFA disciplinary bodies hardly or never prosecuted any clubs for violations of Article 18bis RSTP does not take away the binding character and enforceability of this provision, and the resulting duty of clubs not to breach it (2020/A/7008 & 7009, §§30(i)g and 57).

58. The position of the Appellant finds no support in the doctrine of estoppel, which primarily prevents sports federations from taking explicit contradictory positions, and has a very limited scope in disciplinary proceedings (CAS OG 14/002, §8.17; CAS 2016/O/4684, §83; 2017/A/5050, § 81; CAS 2020/A/7008 & 7009, §§30g and 57). The award quoted by the Appellant is a good illustration of this, since it relates to individual assurances given to an athlete by its international federation about his eligibility, which were withdrawn at a later stage (CAS OG 08/002, §§12-13; see also CAS OG 02/006, §§17 to 19). Implicit assurances may also exceptionally be considered, but should not be assimilated to the (temporary) non-enforcement of legitimate and binding provisions; otherwise, many sports and state provisions would run the risk of no longer achieving their goals due to previous unpunished violations (in the same vein,

59. The Panel is also aware that FIFA’s failure of enforcing of this rule for some time might, under certain conditions, affect the assessment of the sanction and benefit clubs that were left in uncertainty and/or expected that they would not be punished (CAS 2020/A/7008 & 7009, §55;

60. Nonetheless, the Panel is of the view that this circumstance is of no avail for the Appellant in this case. Indeed, at the time of signing the Agreement under review, on 30 January 2020, the Appellant had already been sanctioned by FIFA Disciplinary and Appeal Committees for two similar violations (CAS 2020/A/7008 & 7009, §§12 et seq). While these cases were only definitely decided by the CAS on 10 May 2021, the Appellant should, at the very least, have suspected that it was engaging in reprehensible conduct, especially since other clubs had already unsuccessfully challenged their sanctions (see e.g. CAS 2017/A/5463).

61. In conclusion, the Panel finds that Article 18bis RSTP does not breach the predictability requirement enshrined in the principle nulla poena sine lege clara, and is clearly binding, regardless of the doctrine of estoppel.

b. Purpose and interpretation of Article 18bis RSTP

62. The Panel must turn to the Parties’ disagreement over the correct purpose and interpretation of Article 18bis RSTP. In defending the interpretive approach of Article 18bis RTSP made by its disciplinary bodies, FIFA puts a lot of emphasis on its true meaning through the analysis of the purpose sought and the interests protected. Benfica criticises FIFA’s interpretation of this provision for having changed in recent times and relying on a strict approach that is not consistent with CAS’ recent jurisprudence. At the heart of this disagreement is the concept and threshold of “influence” that can trigger the application of Article 18bis RSTP and the imposition of sanctions. Other, more minor, differences of opinion concern the interaction between this rule and Article 163 CO, which governs the amount, nullity and reduction of contractual penalties.

63. The Panel notes that it is well-established under CAS jurisprudence, referring to the case law of the Swiss Federal Tribunal, that:

“According to the SFT, the starting point for interpreting is indeed its wording (literal interpretation). There is no reason to depart from the plain text, unless there are objective reasons to think that it does not reflect the core meaning of the provision under review. This may result from the drafting history of the provision, from its purpose, or from the systematic interpretation of the law. Where the text is not entirely clear and there are several possible interpretations, the true scope of the provision will need to be narrowed by taking into account all the pertinent factors, such as its relationship with other legal provisions and its context (systematic interpretation), the goal pursued, especially the protected interest (teleological interpretation), as well as the intent of the legislator as it is reflected, among others, from the drafting history of the piece of legislation in question (historical interpretation) (SFT 132 III 226 at 3.3.5 and references; SFT 131 II 361 at 4.2). When called upon to interpret a law, the SFT adopts a pragmatic approach and follows a plurality of methods, without assigning any priority to the various means of interpretation (SFT 133 III 257 at 2.4; SFT 132 III 226 at

64. As stated in a similar vein by other CAS panels:

“According to the jurisprudence of the Swiss Federal Tribunal […], the interpretation of the statutes and rules of FIFA, a large sport association with seat in Switzerland, starts from the literal meaning of the rule, which falls to be interpreted, but must show its true meaning, which is shown by an examination of the relation with other rules and the context, of the purpose sought and the interest protected, as well as of the intent of the have held that the adjudicating body has to consider the meaning of the rule, looking at the language used, and the appropriate grammar and syntax, but has further to identify the intentions (objectively construed) of the association which drafted the rule, and such body may also take account of any relevant historical background which illuminates its derivation, as well as the entire regulatory context in which the particular rule is located”

65. Therefore, in keeping with those precedents, the Panel recalls that the starting point to interpret Article 18bis RSTP must be its literal meaning, complemented by the other available interpretive means to the extent needed to find its true meaning and its scope of application.

66. Thus, in starting with the language of this rule, the Panel must determine the meaning not only of the concept of “influence”, but also its relationship with the literal targets of such influence, i.e. the club’s “independence”, “policies” or “performance of its teams” in the context of “employment and transfer-related matters”.

67. Additionally, in line with the quoted CAS jurisprudence, the Panel must consider the purpose of Article 18bis RSTP, which – as made clear by FIFA and elaborated by CAS precedents – is aimed at (i) protecting the sporting policies and operations of football clubs from being unduly influenced by other parties and (ii) avoiding conflicts of interests that might lead to practices affecting the integrity of the competition (TAS 2016/A/4490, §101; CAS 2017/A/5463, §80; CAS 2020/A/7008 & 7009, §65; Manual on TPI & TPO, p. 14).

68. Moreover, in examining this rule in the context of Swiss law, the Panel observes that Article 18bis RSTP encompasses a prohibition related to the club’s conduct when entering into a contract. Therefore, this provision has the potential to drastically restrict the parties’ “freedom of contract”, which is a fundamental principle of Swiss law, enshrined in Article 19 CO and Article 27 of the Swiss Constitution. Accordingly, as persuasively stated in several CAS precedents, such a restrictive provision must globally be interpreted narrowly and applied on case-by-case basis bearing in mind that, in case of doubt, the adjudicating body must favour the principle of freedom of contract (CAS 2017/A/5463, § 92; CAS 2020/A/7008 & 7009, §66; CAS 2020/A/7158, § 103; CAS 2020/A/7414, 157; see also Manual on TPI and TPO, p. 14).

69. Ultimately, the Panel wishes to clarify that, in view of Article 18bis RSTP’s ratio legis, it would be more than random to leave problematical contractual clauses to the discretion of a judge in case of a hypothetical dispute under Article 163 CO. The Panel also observes that Article 163 (3) CO, which provides that “the court may reduce penalties that it considers excessive”, was primarily designed to reduce excessive contractual penalties aimed at reinforcing the main obligation and/or ensuring its proper performance. It is not intended to allow judges to review a simple contractual determination of damages, nor extensively assess the legality of all types of

contractual clauses against the background of integrity (for more details, see e.g. CAS II 550, §1; SFT 83 II 525, §3).

70. With this in mind, the Panel makes the following considerations.

c. The relevant “influence” under Article 18bis RSTP

71. The Parties disagree as to the correct interpretation of the concept of “influence” provided in Article 18bis RSTP, and the minimum threshold that can trigger sanctions in light of CAS’ recent jurisprudence.

72. Benfica interprets the concept of influence under Article 18bis RSTP very restrictively, and maintains that only a high threshold can trigger the application of sanctions. It submits that several agreements are necessary to generate an influence that could violate this provision, unless the transferred player is exceptionally important. Likewise, the influence must be effective rather than hypothetical and the integrity of competition undermined.

73. FIFA acknowledges that not all third-party influence agreements are unlawful. Nevertheless, it argues that the acquisition of undue influence over one single transfer of one single player already constitutes a breach of Article 18bis RSTP. It also contends that the integrity of competitions is intrinsically bound to the sporting and financial means of the clubs and the amounts at stake when it comes to assessing the existence of influence.

74. The Panel understands that an infringement of Article 18bis RSTP can occur if the influence is effective and has the potential to actually impact the club’s determination, regardless of its practical materialisation.

75. This interpretation is corroborated by CAS jurisprudence, which states that:

“[…] (i) the contract at stake shall enable or entitle the third party to have an influence on the club in the terms described in such article, regardless of the practical materialization of this influence or not, and (ii) that this capacity to influence shall be real and effective. This prohibition established in Article 18bis RSTP will apply insofar as the contract at stake confers to a third party a real and true capacity of producing effects, condition or affect the conduct of a club in labour or transfer-related matters, in a way that the club’s independence and autonomy is really restricted […]” (CAS 2020/A/7016, §56; CAS 2020/A/7414, §163).

76. In other words, a violation of Article 18bis RSTP occurs when the club enters an agreement that enables the other party to acquire the ability to exert undue influence. This is how CAS interprets the expression “from acquiring the ability” of Article 18bis RSTP. No influence has to actually occur and be proven for Article 18bis RSTP to be breached (CAS 2017/A/5463, §91;

77. The Panel reiterates, however, that the limiting effects that this provision can have on the rights of a club demand that it is interpreted restrictively. Therefore, not every possibility of influencing another club shall be considered as an automatic violation of this prohibition. In

this context, a careful examination of Article 18bis RSTP show that both its language (“employment and transfer-related matters”; the club’s “independence, its policies or the performance of its teams”) and purpose (the protection of the integrity of competitions and clubs) point to a construal under which the influence exercised is examined in light of the circumstances of the case.

78. Principal among those circumstances are the sporting and financial situation of the parties and the economic value of the transferred player. In this regard, the Panel confirms the views expressed in the previous award already involving Benfica (CAS 2020/A/7008 & 7009, §76), which states that:

“[…] in players’ employment and transfer matters, the degree of influence that a given contract, or certain contractual clauses, can exert on the “independence”, “policies” and “teams’ performance” of a contracting club can significantly differ depending on (i) the sporting and financial situation and weight of such club as opposed to the sporting and financial situation and weight of the other contracting party or parties, and (ii) the number and economic value of the players for which the club entered into a contractual relationship. In other words, in applying Article 18bis RSTP, there must be a case-by-case appraisal of the relative standing, prominence and market power of the involved clubs and companies”.

79. This is further elaborated in a recent award (CAS 2020/A/7414, §196), which highlights the importance of the amounts provided for in the disputed contract:

“The amount of money that the influenced club Cádiz must pay to Udinese in the event of breaching Clause 3 is an essential element to determine if the identified influence is real, effective and contrary to Article 18bis RSTP”.

80. Along the same lines, the Manual on TPI and TPO (p. 14) mentions that the prohibition “must be applied in a reasonable manner, on case-by-case basis”, which means that in situations where it would be unreasonable to assume the existence of an “undue influence”, no violation occurs.

81. Finally, the Panel fully endorses the views expressed in CAS well-established jurisprudence, according to which one single agreement can constitute undue influence under Article 18bis 2020/A/7414, §171; CAS 2020/A/7158). As FIFA rightly points out, the award quoted by Benfica is taken out of its original context, namely the transfer and registration of minor players, where Article 18bis was only discussed on an ancillary basis, in light of the clubs’ policies (CAS

82. Having established the relevant criteria to be relied upon when applying Article 18bis RSTP, the Panel must turn to the provisions enshrined in the Agreement and sanctioned in the Appealed Decision, and determine whether they constitute an undue influence in the terms described above.

B. On Benfica’s ability to exert the influence envisaged in Article 18bis RSTP

a. Clause 2.3 of the Agreement

83. The Panel finds it useful to recall the content of Clause 2.3 of the Agreement, which states as follows:

“If the transfer PLAYER is for Futebol Clube do Porto - Futebol, SAD, for Sporting Clube de Portugal - Futebol, SAD or the Sporting Clube de Braga, Futebol, SAD, is hereby expressly agreed that the BENFICA SAD will be due the amount corresponding to the ownership of the right to 50 % (fifty percent) of the total value of the transfer, plus an additional compensation of €10.000.000 (ten million), plus the VAT due to rate legal, all to be settled within 30 (thirty) days from the registration of the PLAYER's employment contract with one of the sports companies identified here”.

84. Benfica contends that Clause 2.3 is typical to third-party ownership agreements and merely assigns conditional financial obligations on Avaí in case it receives an offer to transfer the Player. It points out that the additional compensation is reasonable and acceptable in light of CAS jurisprudence, as it would only be triggered if the Player is sold to three Portuguese clubs, and was negotiated in the context of a free of charge transfer.

85. FIFA submits that this clause is problematic both in terms of its very existence and the context and amounts involved. It emphasises that Benfica could influence Avaí’s decision as to whether or not to accept a transfer offer, since the financial consequences on Avaí are structured in order to be so prejudicial that the latter will never decide against Benfica’s interest.

86. The Panel notes that the contractual clause at hand does not provide any direct obligation on Avaí as to whether or not to accept a transfer offer, but only forces it to bear the financial consequences of its decision.

87. Therefore, the Panel must analyse the bearing of the financial consequences in favour of Benfica on Avaí’s independence in its transfer-related decisions. In other words, the Panel must establish whether such conditional obligations are structured in a way that their financial impact can efficiently and unreasonably influence Avaí when deciding whether or not to accept a transfer offer, aside from its autonomous sporting or economic convenience.

88. In this respect, the Panel observes that, unless Benfica successfully asserts its preferential right (Clause 4.2 of the Agreement), Avaí’s financial obligations towards Benfica would be triggered based on the former’s three alternative decisions, as follows:

(i) Avaí decides to accept the transfer offer of one of the three of Benfica’s domestic competitor clubs. In this case, it will have to pay Benfica the amount corresponding to the ownership of the right to 50 % (fifty percent) of the total value of the transfer, plus an additional compensation of EUR 10,000,000 (ten million).

(ii) Avaí decides to reject the transfer offer of Benfica’s domestic competitor clubs. In this case, Avaí would retain the services of the Player and not pay anything to Benfica.

(iii) Avaí decides to accept the transfer offer of any club in the world except one of the three of Benfica’s domestic competitor clubs. In this case, it will only have to pay Benfica the amount corresponding to the ownership of the right to 50% (fifty percent) of the total value of the transfer.

89. The Panel concurs with FIFA that the first scenario may be extremely prejudicial to Avaí’s financial stability, given that Avaí would de facto be prevented from accepting any offer that were not substantially more than EUR 10 million; the first scenario thus can have a bearing and a real ability to influence its decision as to whether or not to accept the offer made.

90. The amount of EUR 10,000,000 that Avaí would have to pay to Benfica, in addition to half of the transfer fee, substantially limits the chances for Avaí to gain some significant consideration by transferring the Player to one of the three Portuguese clubs mentioned in the Agreement. It is obvious that Avaí will try to avoid a transaction which could be very beneficial to both its own interests and those of the Player.

91. Thus, Clause 2.3 has the ability to effectively and unreasonably dissuade Avaí from transferring the Player to one of Benfica’s rival clubs at national level, and seeks to benefit Benfica to the detriment of its direct competitors and of Avaí, with possible consequent distorting effects on the players’ transfer market. If the Player were to be transferred to FC Porto, Sporting Clube de Portugal or Sporting Clube de Braga, Avaí would not only be financially disadvantaged but heavily sanctioned by having to pay the amount of EUR 10,000,000 to Benfica. This overwhelming amount would undoubtedly force Avaí to reconsider the acceptance of an offer from any of these rivals of Benfica. In turn, Benfica profits by ensuring that none of its direct rivals would sign the Player or otherwise it would be financially compensated with an amount greater than what it would obtain if the Player were transferred to any other clubs.

92. The Panel considers that the following circumstances and statistics, provided and documented by FIFA, are decisive to establish a violation of Article 18bis RSTP with reference to Article 2.3 of the Agreement:

- The financial differences between Benfica and Avaí

Benfica is a top club among those earning the highest incomes in Europe. In 2021, it ranked in the 23rd position of the European clubs by revenue (EUR 170.3 million) in the list compiled by the consulting firm Deloitte. On the contrary, Avaí does not appear in any similar list for Latin America or even nationally for Brazil. Based on the information entered into FIFA TMS, Benfica has obtained a revenue of EUR 145 million from the international transfer of players during the last two seasons, while Avaí only managed to earn USD 425,000.

- The sporting differences between Benfica and Avaí

Benfica is one of the most successful clubs in Europe. It has won 37 Primeira Liga titles, more than 20 Taca de Portugal trophies and two consecutive European Cups. It is the most popular Portuguese club worldwide and it has never been relegated from the top tier. Its stadium has the capacity for 65,647 spectators and it is the second club in the world in terms of affiliated

members (230,000). Avaí, on the other hand, is a modest and traditional football club of Florianópolis, Brazil, that normally plays in the second tier. It has only played a few times in the Serie A since its foundation in 1923. Its stadium has a maximum capacity of 17,800 spectators and it has 5,227 members.

- The amounts at stake

The Player was transferred to Avaí for free, indicating that Benfica did not seem to consider that the Player’s economic rights had a significant value at that time. By way of comparison, if Avaí accepted an offer from one of Benfica’s main rivals, it would have to pay EUR 10,000,000. The difference from valuing the Player’s rights from EUR 0 to a compensation of EUR 10,000,000, which possibly amounts to a disguised penalty, cannot reasonably be justified The Player’s economic rights appear to be currently valued at EUR 100,000. This means that the amount of EUR 10,000,000 is equal to 10,000% the value of the Player that was transferred for free by Benfica. This amount is equal to 28 times Avaí’s transfer earnings in the 2019/2020 season and 156 times its transfer earnings of 2020/2021. It also represents more than 400 times the yearly salary of the Player, as provided for in his employment contract.

93. Benfica did not dispute the abovementioned statistics and acknowledged, in its written submissions, “a difference in the standing” between the Parties, while seeking to minimize its legal weight. It also highlighted, at the hearing, that Avaí was still in Serie A when it signed the Agreement. This specification, however, does not alter the Panel’s position and the vast difference in the standing, prominence, and market power of the two clubs.

94. Moreover, the fact that Clause 2.3 is limited to three clubs in Portugal is of no avail to support the Appellant’s arguments. On the contrary, the analysis of the professional pathway of the Player, of Brazilian nationality, shows that he has, since the beginning of his career, only played in Portugal, the country where he is probably well known and most likely to be hired. More generally, Portugal constitutes a very important market for Brazilian players, due notably to linguistic and administrative specificities (common language, few movement and visa restrictions, etc.).

95. The same is true for the CAS award invoked by the Appellant. This award focused on a prohibition that targeted only one club, and did not decide that the influence on a club’s independence would depend on the number of competitors involved. More importantly, it concerned a contract concluded between two prestigious clubs with equal bargaining power

96. The type of transfer (free of charge) is not particularly relevant either when it comes to assessing the compatibility of a contractual clause with FIFA regulations, nor is it a valid excuse to depart from them. It only underlines, once again, the difference in standing of both clubs.

97. Consequently, the Panel concludes that Article 2.3 of the Agreement enables Benfica to influence Avaí’s independence in transfer-related matters through burdensome financial consequences granted in favour of Benfica, in violation of Article 18bis RSTP.

b. Clause 4.4 of the Agreement

98. In continuation, the Panel moves to analyse Clause 4.4 of the Agreement, which reads as follows:

“In the event that AVAÍ FC […] agrees to terminate by mutual agreement the sports employment contract that it celebrates on this date with the PLAYER , or allow the latter to operate the termination with just cause of the sports employment contract, or in addition, it in any way removes the PLAYER'S federative and / or economic rights without granting BENFICA SAD the aforementioned right of preference, it will be obliged to pay BENFICA SAD, as a penal clause, which the parties freely adjust and clarified, compensation of €10.000.000 (ten million), plus the VAT due at the legal rate”.

99. In other words, Clause 4.4 is a penalty clause by means of which Avaí is obligated to pay to the Appellant a penalty of EUR 10,000,000 if it fails to grant the Appellant the right of preference set out in Clause 4.1 in the event that the Player and Avaí mutually terminate the employment contract and/or the Player terminates the contract with just cause.

100. Benfica submits that Clause 4.4 is “common practice” in the world of football, perfectly legal and only exists to ensure that its preferential right is upheld. This preferential right is meant to be exercised before removal or disposal of the Player’s right. Any notification from Avaí or the Player before they enter into a mutual termination or allow a termination with just cause could be easily implemented and would suffice to avoid the penalty.

101. Benfica argues that Clause 4.4 is clearly not drafted in a way to protect its right to 50% of a future transfer sum following the transfer of the player from Avaí FC to a third club, since the termination with just cause by the Player would not be deprive it of such right. Alternatively, even if Clause 4.4 served this purpose, Article 18bis RSTP would not be breached.

102. FIFA retorts that Clause 4.4 enables Benfica to exert undue influence on the independence of Avaí in employment and transfer-related matters, because its preferential right is meant to be exercised after removal or disposal of the Player’s rights. The ability to influence Avaí employment-related matters stems from the fact that it would not be able to afford the termination of the Player’s contract, which would automatically trigger the aforementioned penalty. Meanwhile, the ability to influence Avaí’s transfer-related matters exists because Avaí would be forced to provoke the transfer of the Player in order to grant Benfica its right of preference.

103. FIFA contends that Clause 4.4 also indirectly aims to protect Benfica’s right to 50% of a future transfer sum following the transfer of the Player from Avaí FC to a third club and prevent any possible related damages.

104. The Panel rejects FIFA’s interpretation.

105. The Panel observes that Benfica accepted to transfer the Player to Avaí free of charge and, thus, it is more than reasonable that it demands in return to be granted the opportunity to match

another club’s offer if it wishes to get this Player back at the end of the Agreement or, at least, to be compensated if it is deprived of this right.

106. Unlike FIFA, the Panel finds that, through Clause 4.4, Benfica is not provided with any real ability to influence the Appellant’s independence in employment and transfer-related matters, since:

(i) Clause 4.4 is merely a way of ensuring the enforcement of the preferential right set out in Clause 4.1 of the Agreement.

(ii) According to the Manual on TPI and TPO (p. 175), preferential rights clauses – referred to as “matching rights” or “rights of first refusal” – are not, as such, regarded as a breach of Article 18bis RSTP by the FIFA administration. This fact is undisputed by the Parties and also confirmed in the Appealed Decision, which emphasises that “Clause 4.1 […] [is] not the clause under discussion”.

(ii) It seems evident that the preferential right is meant to be exercised before removal or disposal of the Player’s rights, as afterwards the Player will become a free agent and be able negotiate with any club. This right exists precisely to avoid reaching such a situation before the Appellant would have a chance to re-sign the Player.

(iii) Avaí could easily avoid the application of the penalty of Clause 4.4, by way of a single notification, before the termination of the Player’s employment contract, either by mutual agreement or with just cause. Even a termination with just cause by the Player would, in principle, not prevent Avaí from fulfilling its obligations under the preferential right, since the Player would in any case have to first notify Avaí of his intention to terminate his contract if the situation does not improve and, in case of overdue payables, put the club in default, pursuant to FIFA regulations and the exigence of “ultima ratio” set by CAS precedents (see Articles 14 and 14bis RSTP; and, notably among others, CAS 2020/A/7380, §§79 et seq, and the references). Such requirement would apply regardless of the way the termination occurs, namely a formal termination letter or a determination of termination from the relevant dispute resolution body or arbitral tribunal (CAS 2021/A/7741 §§134 et seq).

(iv) Assuming that Avaí fails to comply with this simple formality, the only element that could be problematic in Clause 4.4 is the amount of the penalty. However, the amount of the penalty alone does not allow for a finding of “undue influence” under Article 18bis RSTP. In the worst-case scenario, the penalty could still be adjusted by the adjudicating body, if needed, based on Article 163 (3) CO, depending on the value of the Player at the time when the penalty is invoked.

(v) FIFA’s broad interpretation of Clause 4.4, according to which the Appellant sought to protect its sell-on right, does not stand. It clearly goes against a literal interpretation of the clause, as its express wording indicates that the penalty is due only in case Avaí disposes of its rights over the Player without granting the preferential right.

Additionally, in accordance with the systematic interpretation, Clause 4 has 5 paragraphs, all of which expressly refer to the preferential right.

(vi) FIFA’s broad interpretation would make sense if Benfica needed to be protected against the risk of missing its share of a future transfer sum if the Player’s employment contract was deliberately terminated in a premature way. Yet, it is not supported by CAS precedents. On the contrary, the award quoted by Benfica shows that if the parties do not act in a loyal way, “causing the loss of any transfer expectation, the conditions are deemed to be accomplished anyway, according to art. 156 CO. It follows that the third party is entitled to receive the amount agreed in the sell-on clause” (CAS 2009/A/1756, summary statement 1 in fine).

107. Consequently, for the reasons explained above, the Panel deems that the Clause 4.4 does not contravene Article 18bis of the RSTP.

C. The information declared in TMS breaches Article 4 (3) of Annexe 3 RSTP

108. According to Article 4 (3) of Annexe 3 RSTP, when creating a transfer instruction in TMS, clubs must provide certain compulsory data, including completing the declaration on third-party payments and influence.

109. Both Parties agree that Benfica did not mention any third-party influence when completing its transfer instruction. They have, however, different views as to the consequences of this absence of declaration.

110. Benfica holds that, without a breach of 18bis RSTP, there can be no violation of Article 4 (3) of Annexe 3 RSTP. In the alternative, Benfica invokes the ne bis in idem principle, which prohibits a sanction from being imposed twice for the same cause of action, to escape any infringement. FIFA refutes both arguments, and sticks to a strict and purposive interpretation of its regulations.

111. In accordance with its reasoning supra, the Panel has already established that Benfica violated Article 18bis RSTP by signing the Agreement. Therefore, it can limit itself here to considering the alternative arguments set forth.

112. The Panel is ready to accept that FIFA’s regulatory framework may be seen as slightly redundant. This redundancy is implicitly acknowledged in the Manual on TPI and TPO (p. 35), which states that:

“An infringement of article 18bis […] implies a breach of article 4 paragraph 3 of Annexee 3 and therefore, the decisions of the FIFA judicial bodies sanctioning a club for a breach of article 18bis […] also find clubs guilty of an infringement of article 4 paragraph 3 of Annexee 3 to the FIFA RSTP”.

113. Thus, it is likely that a club which enters a contract that it believes – rightly or wrongly – to be in compliance with the regulations in force will not disclose any irregularities when completing its transfer instruction. Moreover, the club will have no way to nuance its statements, since the

declaration form on third-party influence on clubs, as provided by FIFA, does not allow any comments and only requires to tick a box, as follows:

114. Similarly, a club that has knowingly entered into a contract that violates the relevant regulations will be inclined to try to hide this intent rather than expose it, seeking to elude punishment.

115. Nevertheless, the Panel cannot adhere to Benfica’s position, for two main reasons convincingly elaborated by FIFA.

116. First, it is precisely through Article 4 (3) of Annexe 3 RSTP that FIFA seeks to protect clubs from entering into agreements that breach Article 18bis RSTP: by declaring this in TMS, clubs facilitate the investigatory tasks of FIFA’s administration that, ultimately, seeks to ensure that the transfer market continues to be as transparent as possible. In the wake of this precautionary approach, Article 4 (3) of Annexe 3 RSTP constitutes a second safety net, intended to make clubs aware of their obligations.

117. Secondly, the ne bis in idem principle does not apply in casu, since Article 18bis RSTP and Article 4 (3) Annexe 3 RSTP sanction different conducts: the former sanctions clubs for entering into agreements which enable the influence (of other clubs or third parties) and the latter sanctions the failure to declare in TMS that a certain type of agreement has been concluded in the framework of an international transfer.

118. The Panel wishes to underline that this issue is, in any case, not of great practical importance. The FIFA Appeal Committee did not, when discussing the sanction in its decision, distinguish between principal and accessory violation, which suggests that it did not give much weight to the latter, if at all, when punishing the Appellant.

119. Notwithstanding the above, the Panel concludes that Benfica breached Article 4 (3) Annexe 3 FIFA RSTP.

D. The proportionality of the sanction

120. The FIFA Disciplinary Committee sanctioned Benfica with a fine of CHF 40,000 and a warning for breaching Article 18bis RSTP and Article 4 (3) of Annexe 3 RSTP. The FIFA Appeal Committee confirmed the decision, but did not find it necessary to examine the proportionality of the sanctions, in the absence of prayers for relief in this regard.

121. The Appellant contends that these sanctions are not proportionate to the alleged infringement and must be reduced on the basis of various mitigating factors and recent FIFA and CAS jurisprudence. It relies on TAS 2020/A/7158, where the fine amounted to CHF 10,000, namely 25% of the fine imposed on the Appellant.

122. FIFA argues that the sanctions are proportionate and, in any case, can only be amended by CAS in arbitrary situations. It submits that the sanctions comply with FIFA regulations, FIFA and CAS jurisprudence and the specific circumstances of the case. It holds that the Appellant cannot rely on TAS 2020/A/7158, which involves a fine imposed on an influenced club. It retains that the Appellant bears a high degree of responsibility, in light of its broad experience, the substantial importance of the provisions that it breached, and the fact that it breached them for the third time in a row.

123. In order to determine the appropriate sanctions in the cases at hand, the Panel reiterates that the relevant version of the Disciplinary Code is that of June 2019, pursuant to the reasoning explained in section IX above. It observes that under Article 6 (1) FDC, legal persons (i.e. including clubs) are punishable with the following sanctions: warning, reprimand, fine, return of awards, and withdrawal of a title. Notably, Article 6 (4) FDC specifies that a fine “shall not be less than CHF 100 or more than CHF 1,000,000”.

124. In addition, under Article 24 FDC, the competent disciplinary body “determines the type and extent of the disciplinary measures to be imposed in accordance with the objective and subjective elements of the offence, taking into account both aggravating and mitigating circumstances”. This includes “any assistance of and substantial cooperation by the offender in uncovering or establishing a breach of any FIFA rule, the circumstances and the degree of the offender’s guilt and any other relevant circumstances”.

125. With this legal framework in mind, the FIFA Disciplinary Committee made the following considerations:

(i) Benfica was the most influential and the most beneficiary of the Agreement.

(ii) Two clauses of the Agreement violate Article 18bis of the RSTP;

(iii) The Club was already sanctioned several times in the past for the same violation, i.e. by entering into a contract against Article 18bis RSTP.

126. The Panel has found that the Appellant violated Article 18bis RSTP, since the Agreement allows it to unduly influence Avaí’s independence and policies in transfer-related matters.

127. However, the legal reasoning and the findings of the Panel differ in some measure from those of the Appealed Decision; accordingly, the Panel must carefully determine whether the sanctions imposed on the Appellant are proportionate.

128. To that aim, the Panel recalls that, while it should not easily tamper with the sanctions imposed by the Appealed Decisions, its de novo power of review allows it to find that the sanctions are disproportionate and to determine more appropriate sanctions (see CAS 2018/A/5977, §178,

§123).

129. In the case at stake, on the one hand, the Panel concurs with FIFA that Clause 2.3 of the Agreement breaches Article 18bis RSTP, and that Benfica is a recidivist in breaching this provision. It also confirms, as per the analysis supra, that Benfica may not rely on the argument that this provision was not enforced for several years and was unclear, since it had itself been sanctioned for similar facts by FIFA in the past.

130. On the other hand, the Panel does not agree with FIFA that Clause 4.4 of the Agreement constitutes, per se, any disciplinary violation. Rather, it is a clause merely aimed at ensuring the enforcement of the legitimate preferential right granted by Avaí in favour of Benfica. Therefore, only one violation, instead of two, can be held against the Appellant. Moreover, Benfica promptly and adequately cooperated with FIFA’s disciplinary bodies. As a consequence, the Panel finds that the sanctions imposed on Benfica are disproportionate and must be reduced.

131. In light of all of the above, the Panel concludes that the fine inflicted on Benfica by the Appealed Decision is manifestly disproportionate. It deems appropriate to reduce it from CHF 40,000 to CHF 20,000. As usual with pecuniary sanctions imposed by FIFA, this fine will have to be paid to FIFA within 30 (thirty) days after receipt of this arbitral award.

132. Finally, the Panel confirms the warning imposed on Benfica as to its future conduct under Article 6 FDC. The Panel considers, in particular, the aim pursued by Article 18bis RSTP and the fact that, with the case at hand, the Appellant totals five violations of Article 18bis RSTP

E. Further or different motions

133. All further or different motions or requests of the Parties are dismissed.