Ittihad Club of Saudi Arabia v. Fédération Internationale de Football Association (FIFA)

II. FACTUAL BACKGROUND — A. Background facts

3. Below is a summary of the main relevant facts, as established on the basis of the parties’ written submissions and the evidence examined in the course of the present appeal arbitration proceedings. This background is presented for the sole purpose of providing a synopsis of the matter in dispute. Additional facts may be set out, where relevant, in connection with the legal discussion.

4. On 29 July 2015, the Single Judge of FIFA’s Players’ Status Committee (the “Single Judge”) decided (the “PSC Decision”) that the Club had to pay to the Italian football club AS Roma, within 30 days as from the date of notification of the decision, the amount of EUR 1,760,000 as well as interest at a rate of 5% p. a. until the date of the effective payment.

5. Furthermore, the Single Judge imposed a fine in the amount of CHF 60,000 on the Club that had to be paid within 30 days of notification of the decision as well as the costs of the proceedings to the total amount of CHF 25,000 to be paid within 30 days of notification of the decision, out of which CHF 20,000 to FIFA and CHF 5,000 to AS Roma.

6. The motivated decision was duly communicated to the Club on 4 August 2015. As no appeal was lodged against the PSC Decision with the Court of Arbitration for Sport (“CAS”), the decision became final and binding.

7. On 26 October 2015, FIFA urged the Club to provide FIFA with a copy of the payment receipt of the relevant amounts by no later than 5 November 2015, in the absence of which FIFA would proceed to forward the file to the Disciplinary Committee (the “FIFA DC”) for consideration and a formal decision.

8. On 25 November 2015, FIFA informed the Club that in view of the fact that the Club had not provided any evidence of payment, the matter was forwarded to the FIFA DC.

9. On 22 January 2016, AS Roma confirmed having received the owed amounts.

B. Proceedings before the Disciplinary Committee of FIFA

10. On 3 February 2016, FIFA instigated disciplinary proceedings against the Club and informed the SAFF, inter alia, as follows:

“We refer to the above-mentioned matter as we have learned that [the Club] has not acted in accordance with the [PSC Decision]. This would appear to be a violation of article 64 of the FIFA Disciplinary Code (FDC), and as such, it will be subject of an investigation by the FIFA Disciplinary Committee.

We are therefore opening disciplinary proceedings against [the Club] in respect of a violation of article 64 of the FDC.

In this regard, we wish to inform you and [the Club] that the case will be submitted to the FIFA Disciplinary Committee for evaluation on 4 March 2016 so that disciplinary measures (fine, deduction of points, relegation to a lower league) may be imposed on the club.

With this in mind, we hereby urge [the Club] to pay immediately the following outstanding amounts due to FIFA and send us a copy of proof of payment:

– CHF 20,000 as procedural costs. – CHF 60,000 as a fine.

Should [the Club] pay all outstanding amounts by 22 February 2016 at the latest and send us copies of proof of payment by the same deadline, the case will not be submitted to the FIFA Disciplinary Committee and the disciplinary proceedings will be closed.

Should [the Club] fail to submit a statement or pay the outstanding amounts by the specified deadline, the FIFA Disciplinary Committee will decide on the case using the file in its possession (cf. art. 110 par. 4 FDC).

The Saudi Arabian Football Federation is kindly requested to forward this letter to [the Club] immediately”.

11. On its meeting held on 4 March 2016, the FIFA DC rendered the following decision (the “Appealed Decision”):

“1. The club Al Ittihad is pronounced guilty of failing to comply with the decision passed by the Single Judge of the Players’ Status Committee on 29 July 2015 and is, therefore, in violation of art. 64 of the FIFA Disciplinary Code.

2. The club Al Ittihad is ordered to pay a fine to the amount of CHF 10,000. The fine is to be paid within 30 days of notification of the present decision. […].

3. The club Al Ittihad is granted a final period of grace of 30 days as from notification of the present decision in which to settle its debt to FIFA.

4. Finally, the debtor is warned and notified that in the case of non-payment of the outstanding amount to FIFA within the period stipulated, the case will be re-submitted to the FIFA Disciplinary Committee

in order to impose harsher sanctions against the debtor. These sanctions may lead, amongst others, to a deduction of points from the debtor’s first team in the domestic league championship or to a relegation of said team to a lower league.

5. The costs of these proceedings amounting to CHF 2,000 are to be borne by the club Al Ittihad and shall be paid according to the modalities stipulated under point 2. above”.

12. On 21 April 2016, the grounds of the Appealed Decision were communicated to the parties, determining the following:

– “According to art. 62 par. 2 of the FIFA Statutes, the Disciplinary Committee (hereinafter 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 Members, clubs, Officials, Players and match and players’ agents.

– 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).

– 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.

– In what concerns the matter at stake, the Committee takes due note that the decision imposed by the Single Judge of Players’ Status Committee on 29 July 2015 was passed in application of art. 12bis of the Regulations on the Status and Transfer of Players, which aims at establishing a stronger system with regard to overdue payables towards players and clubs (Circular No 1468 dated 23 January 2015). The FIFA Disciplinary Committee underlines, in this context, that the aim of this new provision is to ensure that clubs comply with their contractual obligations.

– Having said that, the Committee notes that the grounds of the decision passed by the Single Judge of the Players’ Status Committee on 29 July 2015 had been duly communicated on 4 August 2015 to the debtor and that no appeal against the decision passed by the Single Judge of the Players’ Status Committee was lodged with the Court of Arbitration for Sport (CAS). Therefore, the decision became final and binding.

– In view of what has been explained […] above, the Committee is not allowed to analyse the case decided by the Single Judge of the Players’ Status Committee 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 decision rendered by the Single Judge of the Players’ Status Committee.

– As the debtor did not fully comply with the decision passed by the Single Judge of the Players’ Status Committee on 29 July 2015 and is consequently withholding money from FIFA, it is considered guilty under the terms of art. 64 of the FDC.

– The fine to be imposed under the above-referenced art. 64 par. 1a) 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 FIFA. 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 Committee regards a fine amounting to CHF 10,000 as appropriate. This amount complies with the Committee’s established practice.

– In application of art. 64 par. 1b) of the FDC, the Committee considers a final deadline of 30 days as appropriate for the amount to be paid to FIFA.

– In accordance with art. 64 par. 1c) of the FDC, the debtor will be warned and notified that, in the case of default within the period stipulated, the case will be resubmitted to the FIFA Disciplinary Committee in order to impose harsher sanctions on the debtor. These sanctions may lead, amongst others, to a deduction of points from the debtor’s first team in the domestic league championship or to a relegation of said team to a lower league. The order to implement the deduction of points will be issued on the association concerned by the secretariat to the FIFA Disciplinary Committee.

– The Committee decides based on art. 105 par. 1 of the FDC that the costs and expenses of these proceedings amounting to CHF 2,000 shall be borne by the debtor”.

III. PROCEEDINGS BEFORE THE COURT OF ARBITRATION FOR SPORT

13. On 6 May 2016, the Club lodged a Statement of Appeal with the CAS in accordance with Article R48 of the CAS Code of Sports-related Arbitration (the “CAS Code”), challenging the Appealed Decision and nominating Mr Attila Berzeviczi, Attorney-at-Law in Budapest, Hungary, as arbitrator.

14. On 19 May 2016, the Club filed its Appeal Brief in accordance with Article R51 of the CAS Code. This document contained a statement of the facts and legal arguments and included the following requests for relief:

“i. To uphold and accept the appeal against the FIFA decision dated March 04, 2016 in the matter with reference number ref. 160067 PST KSA ZH.

ii. To annul the part of the Appealed decision obliging the Club to pay the amount of fine equal to CHF 10,000.

Alternatively,

iii. In case the honourable members of the Panel consider that the fine, in principle should be applied to the Club, to reduce its amount in order for it to be in line with the established practice of the FIFA Disciplinary Committee.

iv. To condemn FIFA to payment of all the CAS arbitration and administration costs and the Arbitrator fees.

v. To fix a sum to be paid by FIFA to Al Ittihad Saudi in an amount of CHF 5,000 to cover its defence fees and costs”.

15. On 19 May 2016, FIFA nominated Prof. Dr. Martin Schimke, Attorney-at-Law in Dusseldorf, Germany, as arbitrator.

16. On 28 June 2016, FIFA filed its Answer in accordance with Article R55 of the CAS Code, submitting the following requests for relief:

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

b. To confirm the decision hereby appealed against.

c. To order the Appellant to bear all costs incurred with the present procedure and to cover all the Respondent’s legal expenses relating to the present procedure”.

17. On 29 June 2016, FIFA informed the CAS Court Office of its preference that the arbitral award be rendered on the basis of the parties’ respective written submissions.

18. On 30 June 2016, the Club informed the CAS Court Office of its preference for a hearing to be held.

19. On 15 July 2016, pursuant to Article R54 of the CAS Code, and on behalf of the President of the CAS Appeals Arbitration Division, the CAS Court Office informed the parties that the arbitral tribunal appointed to decide the matter was constituted by:

– Mr Manfred Nan, Attorney-at-Law in Arnhem, the Netherlands, as President; – Mr Attila Berzeviczi, Attorney-at Law in Budapest, Hungary; and – Prof. Dr. Martin Schimke, Attorney-at-Law in Dusseldorf, Germany, as arbitrators.

20. On 3 August 2016, and on behalf of the Panel, the CAS Court Office informed the parties that the Panel, upon examination of the written submissions, did not deem a hearing necessary at the time, but invited the parties to inform the CAS Court Office whether they would agree to file one final round of written submissions in lieu of a hearing.

21. On 4 August 2016, the Club agreed to file one final round of written submissions in lieu of a hearing.

22. On 5 August 2016, FIFA informed the CAS Court Office that it did not deem it necessary to file a final round of written submissions.

23. On 9 August 2016, the CAS Court Office informed the parties that, upon consideration of their position, the Panel had decided to order the parties to file an additional round of written submissions, pursuant to Articles R57 and R44.3 of the CAS Code.

24. On 24 August 2016, the Club filed its Reply in accordance with the instructions of the Panel.

25. On 1 September 2016, FIFA filed its Second Response in accordance with the instructions of the Panel.

26. On 27 and 28 September 2016 respectively, FIFA and the Club returned duly signed copies of the Order of Procedure to the CAS Court Office, in which both parties expressly stated that they did not raise any objection to the procedure adopted by the Panel and that their right to be heard had been respected.

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

IV. SUBMISSIONS OF THE PARTIES

28. The following outline of the parties’ positions is illustrative only and does not necessarily encompass every contention put forward by the parties. However, the Panel has carefully considered all the written submissions made by the parties, even if there is no specific reference to those submissions in the following summaries.

29. The Club’s submissions, in essence, may be summarised as follows:

– The Club refers to Article 39 of the FIFA Disciplinary Code (“FDC”) and asserts that the sanction imposed by FIFA is disproportionate because not all relevant factors were taken into account.

– Firstly, the Club points out that the Appealed Decision does not contain any reference to the fact that the Club paid the total amount due to AS Roma, which amount was equal to approximately 95% of the total sum due.

– Secondly, the Club submits that as FIFA, pursuant to Article 40 FDC, can increase a sanction in case of repeated infringements, FIFA should also take it into account if a club commits a first infringement and that this should be considered like a “mitigating factor for application of a less severe sanction”.

– With reference to CAS jurisprudence, the Club argues that the sanction imposed is approximately equal to 17% of the total amount due to FIFA, which is not in accordance with FIFA’s well-established practice as “at no point the fines imposed on the parties exceeded 10% of the principal amount of the debt”.

– Finally, the Club maintains that the amount of the fine is to be reduced to an amount which would be in line with the well-established practice of the FIFA PSC. The discretion of the Panel to mitigate the fine derives from Article 163(3) of the Swiss Code of Obligations (the “SCO”).

30. FIFA’s submissions, in essence, may be summarised as follows:

– FIFA maintains that the PSC Decision was notified to the Club on 4 August 2015. As no appeal to the CAS was lodged by the Club, the PSC Decision was final and binding at the time the disciplinary proceedings were opened.

– The FIFA DC is not allowed to analyse a case decided by the relevant body as to the substance but has as a sole task to analyse if the debtor complied with the final and binding decision of the relevant body. Moreover, CAS should only address the question whether the Club respected and fulfilled that decision, but no longer its content.

– FIFA maintains that if the FIFA DC is not provided with proof that the payment has been executed or that a payment plan was agreed upon, it will render a decision imposing a fine on the debtor for failing to comply with a decision and will grant the debtor a final period of grace as from notification of the decision in which to settle its debt to the creditor and/or to FIFA. It is undisputed that the amounts owed to the creditor club were executed and that no payment – not even a partial amount – in favour of FIFA was executed by the Club.

– FIFA finds that the FIFA DC correctly applied Article 64 of the FDC as the Club breached said article by not complying with a final and binding decision passed by a FIFA body.

– In respect of the proportionality of the fine, FIFA maintains that CAS – notwithstanding its power to review a case de novo – shall amend a disciplinary decision of a FIFA judicial body only in cases in which it finds that the relevant FIFA body exceeded the margin of discretion accorded to it by the principle of association autonomy. According to FIFA, this is not the case if the Panel merely disagrees with a specific sanction, but only if the sanction concerned is to be considered as evidently and grossly disproportionate to the offence.

– FIFA submits that the FIFA DC took into account all relevant factors, arguing that – in the light of the amount of the outstanding debt – the sanction imposed for noncompliance is “proportionate and in line with the Committee’s longstanding practice and jurisprudence”.

– Contrary to the argument of the Club, FIFA submits that the outstanding amount was not CHF 60,000, but CHF 80,000. FIFA provided seven other decisions of the FIFA DC where similar outstanding amounts were due and in which also a fine of CHF 10,000 was imposed. In all these decisions, the fines corresponded to 10-13% of the outstanding amounts. A fine of CHF 10,000 is 12.5% based on an outstanding amount of CHF 80,000.

– Moreover, FIFA maintains that harsher sanctions may be imposed in case of repeated infringements but there is no room in Article 40 FDC to consider the lack of repeated offences as a mitigating circumstance. Nevertheless, FIFA adds that it was not the first infringement of the Club, but that another fine (of CHF 30,000) for non-compliance with a FIFA decision had already been imposed on it before.

– Finally, FIFA concludes that “the imposed sanction is by no means evidently and grossly disproportionate to the offence” and as such shall not be amended.