Clube Atlético Mineiro v. Fédération Internationale de Football Association (FIFA), Udinese Calcio S.p.A

II. FACTUAL BACKGROUND

The circumstances and provisions discussed below constitute a summary of the relevant facts and evidence as set forward by the Parties in their respective written submissions. This factual background is made 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.

On 1 May 2014, CAM and Udinese signed a transfer agreement (the “Transfer Agreement”) regarding the transfer of M., a Brazilian professional football player (the “Player”), from Udinese to CAM.

Pursuant to article 3 of the Transfer Agreement, CAM undertook to pay to Udinese the total amount of EUR 3,315,000 payable in three equal instalments of EUR 830,000 and one instalment of EUR 825,000 on 15 January 2015, 15 July 2015, 15 January 2016 and on 15 July 2016, respectively.

Article 6 of the Transfer Agreement stated as follows:

“All sums payable under this contract will be paid by the Brazilian club on the due dates for payment by bank transfer to the account that the Italian club will communicate in writing”.

On 5 January 2015, Udinese sent to CAM an invoice dated 22 August 2014 with its bank details with respect to the first instalment payment. On 23 January 2015, Udinese reminded CAM that the first instalment was due and requested the payment of EUR 830,000 plus 10 % interest as from 16 January 2015.

In several exchanges between the Parties, CAM informed Udinese that it could not process the payment of the first instalment due to financial difficulties. Therefore, CAM offered a rescheduling of the instalments.

On 17 June 2015, CAM and Udinese signed and concluded an amendment to the Transfer Agreement (the “Amendment Agreement”). Pursuant to article 2 of the Amendment Agreement, CAM and Udinese agreed to reschedule the payment of the first two instalments (the “rescheduled instalments”). Accordingly, CAM and Udinese agreed to replace them by the payment of EUR 150,000 to be paid on the last day of each month from July 2015 to June 2016 (instead of the two EUR 830,000 instalments originally stipulated). Article 3 of the Amendment Agreement provides that if there is any delay of partial payment, the remainder rescheduled instalments will become immediately due and enforceable.

Having received no payment from CAM, Udinese requested, in a letter dated 29 October 2015, the immediate payment of the rescheduled instalments due under the Amendment Agreement.

On 29 December 2015, CAM informed Udinese that it had processed the payment of EUR 150,000, thus several months after the first rescheduled instalment was due. No other payment was made under the two first instalments of EUR 830,000.

To claim payment of the two first instalments under the Transfer Agreement, Udinese initiated proceedings before the Single Judge of FIFA Players’ Status Committee (the “Single Judge”). In a decision dated 26 April 2016 (the “First Single Judge’s Decision”), the Single Judge ruled that CAM had to pay to Udinese (i) EUR 1,350,000 as well as interest at a rate of 5 % per year as from 1 October 2015 until the date of effective payment and (ii) interest at a rate of 5 % per year on the amount of EUR 150,000 as from 1 October 2015 until 29 December 2015. The First Single Judge’s Decision was not challenged by CAM.

On 23 May 2016, Udinese sent to CAM the account number on which the remittance was to be made. Yet, CAM did not process any payments and the two first instalments remained unpaid.

On 15 January 2016, the third instalment of EUR 830,000 under the Transfer Agreement matured. In a telefax dated 21 March 2016, Udinese sent to CAM a payment reminder to urge the latter to process the payment corresponding to the third instalment. However, the third instalment remained unpaid.

To claim the payment of the third instalment of EUR 830,000 under the Transfer Agreement, Udinese initiated in front of the Single Judge another procedure in order to recover the amount due.

On 13 June 2016, the Single Judge issued a decision regarding the third instalment (the “Appealed Decision”) and ruled that:

“1. The Claim of the Claimant, Udinese Calcio, is partially accepted.

2. The Respondent, Atlético Mineiro, has to pay to the Claimant, within 30 days as from the date of notification of this decision, overdue payables in the amount of EUR 830,000 as well as interest at a rate of 5% per year from 16 January 2016 until the date of effective payment.

3. If the aforementioned amount plus interest is not paid within the aforementioned deadline, the present matter shall be submitted, upon request, to FIFA’s Disciplinary Committee, for consideration and a formal decision.

4. Any further claims lodged by the Claimant, Udinese Calcio, are rejected.

5. The Respondent, Atlético Mineiro, is ordered to pay a fine in the amount of CHF 30,000, within 30 days as from the date of notification of the present decision, to FIFA.

6. The final costs of the proceedings in the amount of CHF 20,000 are to be paid by the Respondent, Atlético Mineiro, within 30 days as from the date of notification of the present decision (…).

7. (…).

8. The Claimant, Udinese Calcio, is directed to inform the Respondent, Atlético Mineiro, immediately and directly of the account number to which the remittances (…) are to be made and to notify the Single Judge of every payment received”.

On 24 June 2016, the General Secretariat of FIFA (the “FIFA General Secretariat”) notified the Appealed Decision to the Appellant and to the First Respondent, and on the same date Udinese sent to CAM the account number on which the remittance was to be made.

III. PROCEEDINGS BEFORE THE COURT OF ARBITRATION FOR SPORT

On 15 July 2016, CAM filed a statement of appeal (the “Statement of Appeal”) with the CAS against the Appealed Decision, pursuant to the Code of Sports-related Arbitration (“the Code”) and to FIFA Regulations on the Status and Transfer of Players (“FIFA RSTP”). In its Statement of Appeal, CAM requested the President of the Appeals Arbitration Division of the CAS to appoint a sole arbitrator pursuant to article R40.1 of the Code.

On 27 July 2016, the CAS Court Office (“the CAS”) invited the Parties to provide their position on whether they would agree that the present case being referred to the same Panel as in the proceedings CAS 2016/A/4719 (the “proceedings CAS 2016/A/4719”). The CAS also invited the Respondents to provide their position on whether they agreed with the Appellant’s request for the appointment of a sole arbitrator.

On 29 July 2016, Udinese informed the CAS that it did not object that the present arbitration proceeding be referred to the same panel as in the proceeding CAS 2016/A/4719, but informed the CAS it disagreed with the appointment of a sole arbitrator, and requested that the dispute be submitted to a panel of three arbitrators.

On the same date, CAM also agreed that the present arbitration proceeding should be submitted to the same panel as in the proceeding CAS 2016/A/4719, but reiterated its request for the appointment of a sole arbitrator.

This same day, on 29 July 2016, CAM submitted its appeal brief (the “Appeal Brief”).

On 2 August 2016, FIFA pointed out that the present arbitration would be one of the first cases dealing with the issue of overdue payables and therefore the outcome of the proceeding could bear substantial consequences. FIFA thus informed the CAS of its preference for a panel of three arbitrators.

On 8 August 2016, the CAS communicated to the Parties the decision of the Deputy President of the CAS Appeals Arbitration Division (the “Deputy President”) to submit the present procedure as well as the proceeding in CAS 2016/A/4719 to a panel composed of the three same arbitrators. Consequently, the CAS invited CAM to nominate an arbitrator.

On 18 August 2016, CAM informed the CAS that it nominated Mr João Nogueira Da Rocha, Attorney-at-Law, Lisbon, Portugal, as its arbitrator.

On 29 August 2016, the CAS invited Udinese and FIFA to nominate an arbitrator and reminded them that the Deputy President had decided to submit the present arbitration proceedings to the same panel as the proceedings in CAS 2016/A/4719.

On 30 August 2016 and 1 September 2016 respectively, Udinese and FIFA informed the CAS of their decision to appoint Mrs Margarita Echeverria, Attorney-at-Law, San José, Costa Rica, as arbitrator.

On 6 September 2016, the CAS informed Udinese and FIFA that CAM had paid its share of the advance costs and therefore, both Respondents had twenty days to submit their Answer.

On 28 September 2016, FIFA submitted its answer to the Appeal Brief (“FIFA’s Answer”).

On 29 September 2016, the CAS informed the Parties that the panel of three arbitrators (the “Panel”) was duly constituted as follows:

President: Mr Lars Halgreen, Attorney-at-Law, Copenhagen, Denmark; Arbitrator: Mr João Nogueira Da Rocha, Attorney-at-Law, Lisbon, Portugal; Arbitrator: Mrs Margarita Echeverria, Attorney-at-Law, San José, Costa Rica.

On 5 October 2016, Udinese submitted its Answer to the Appeal Brief (“Udinese’s Answer”).

On 6 October 2016, the CAS invited the Parties to choose between a hearing to be held or for the Panel to issue an award based solely on the Parties’ submissions.

On 10 October 2016 and 13 October 2016 respectively, the Parties informed the CAS that they did not deem that a hearing was needed.

On 22 November 2016, the CAS informed the Parties of the appointment of Mr Hervé Le Lay as an Ad hoc Clerk and forwarded his statement of independence. The Parties made no objections regarding his appointment.

On 31 January 2017, the CAS issued an Order of Procedure, which was signed by the First Respondent, the Appellant and the Second Respondent on 1, 6 and 7 February 2017 respectively. By the signature of the Order of Procedure, the Parties expressly authorized the Panel to decide on the sole basis of their written submissions, without the need to hold a hearing, and confirmed that their right to be heard had been respected.

IV. SUBMISSIONS OF THE PARTIES — A. The position of the Appellant

In the Appeal Brief, the Appellant challenged the Appealed Decision, submitting the following requests for relief to the CAS:

“FIRST - To set aside the Appealed Decision in full;

SECOND - To confirm that the First Respondent failed to comply with its obligations set out in the Contract, that is to say, to forward in writing to the Appellant the bank account details in order to permit the latter to pay the amount due as third instalment of the transfer fee for the permanent transfer of the Player;

THIRD - To uphold, in the scenario above, that the Appellant was entitled to withhold the payment of the referenced amount due as third instalment, as well as there is no legal basis for the imposition of any default interest whatsoever (cf. Art 82 of the Swiss CO);

FOURTH - To order the First Respondent and FIFA to pay the full amount of the CAS arbitration costs; and

FIFTH - To order the First Respondent and FIFA to pay a significant contribution towards the legal costs and other related expenses of the Appellant, at least amounting CHF 20,000.

Alternatively, and only in the event the above is rejected:

SIXTH - To uphold, assuming but not admitting, that (somehow) the First Respondent complied with the terms and conditions set out in Art. 5 of the Contract, in any event, FIFA Single Judge had no legal basis to impose any sanction on the Appellant, in casu, a fine of CHF 30,000 (cf. Art.12bis, par. 4 of FIFA RSTP);

SEVENTH - To order the First Respondent and FIFA to pay the full amount of the CAS arbitration costs; and

EIGTH - To order the First Respondent and FIFA to pay a significant contribution towards the legal costs and other related expenses of the Appellant, at least amounting CHF 20,000.

Alternatively, and only in the event the above is rejected:

NINTH - To uphold, assuming but not admitting, that (somehow) the First Respondent complied with the terms and conditions set out in the Transfer Agreement, in any event, the fine of CHF 30,000 violates the principle of proportionality and as such, shall be reduced to an amount no higher than CHF 20,750;

TENTH - To uphold, assuming but not admitting, that (somehow) the First Respondent complied with the terms and conditions set out in the Transfer Agreement, the decision to impose only to the Appellant the obligation to pay the procedural costs has no legal basis whatsoever. As such, the First Respondent had to pay an amount of at least CHF 5,000 and the Appellant the remaining CHF 15,000; and

ELEVENTH - To order the First Respondent and FIFA to pay the full amount of the CAS arbitration costs; and

TWELVETH - To order the First Respondent and FIFA to pay a significant contribution towards the legal costs and other related expenses of the Appellant, at least amounting CHF 20,000”.

The Appellant’s submissions, in essence, may be summarised as follows:

- Both FIFA Rules Governing the Procedure of the Players’ Status Committee and the Dispute Resolution Chamber (the “FIFA Procedural Rules”) edition 2015 and FIFA RSTP edition 2015 apply to the dispute. Swiss procedural law is applicable to these proceedings as the seat of the arbitration is Lausanne, Switzerland, in particular the Swiss Private International Law Act (the “PILA”).

- The Appealed Decision failed to comply with the procedural obligations set out in article 14 paragraph 4 of the FIFA Procedural Rules and CAS jurisprudence, notably the obligation to establish clear and predictable reasons for the findings of the conclusions.

- According to the Transfer Agreement, the Appellant undertook to pay a total transfer fee to the Respondent amounting to EUR 3,315,000 payable in four equal instalments upon the receipt in writing of the bank account information in which such amounts had to be paid.

- The Appellant contends, however, that: (i) pursuant to article 6 of the Transfer Agreement, the Appellant and the First Respondent only agreed on written communications, which is defined, through the complimentary application of the FIFA Regulations and articles 13, 14 and 16 of the Swiss Code of Obligations (“the Swiss CO”) by a document in its original format with the original signature; (ii) according to the

Appellant’s witnesses, such writing is a mandatory prerequisite for banks in Brazil to prove there is no involvement with terrorist organizations or money laundering; (iii) it never received in writing the referenced bank account, which was a sine qua non condition before the payment of the instalments; (iv) therefore the Appellant had contractual grounds to withhold the payment of instalments.

- The First Respondent failed to comply with its own obligations, and therefore it had no right, under article 82 of the Swiss CO, to claim the performance of the Appellant’s obligations. By deciding otherwise, the Single Judge rejected what the Parties freely agreed on and violated the due process.

- The Appellant contends that pursuant to article 12bis of the FIFA RSTP, a club must be put in default in writing to consider that overdue payables exist.

- The First Respondent asserts that a facsimile dated 21 March 2016 was sent to the Appellant warning that the payment of the third instalment was due. However, the First Respondent does not confirm the receipt of such alleged warning via facsimile. Further, this notification was not in writing and therefore did not contain the original signature of the latter, which was in breach with what was required from a written notification.

- The First Respondent did not request the imposition of any sanction on the Appellant before the Single Judge, notably pursuant to article 12bis, paragraph 4 of the FIFA RSTP, and therefore the latter had no legal grounds to impose on the Appellant the CHF 30,000 fine. In any event, the CHF 30,000 fine for an outstanding amount of EUR 3,315,000 violates the principle of proportionality and shall not, therefore, exceed CHF 20,750.

- The Appellant should not be the only one to bear the procedural costs as they are to be divided, as stated in the Appealed Decision and pursuant to article 18 paragraph 1 of the FIFA Procedural Rules, upon “the parties’ degree of success in the proceedings”. As the First Respondent’s claim had only been partially accepted, the procedural costs shall be divided equally. The prevailing party should further receive a contribution towards its legal fees and other expenses incurred in connection with the proceedings.

B. The position of the First Respondent

In its Answer, the First Respondent submitted the following requests for relief:

“In view of the above, the First Respondent respectfully asks the Panel:

to reject the appeal;

to uphold the Appealed Decision;

to condemn the Appellant to the payment in favour of the First Respondent of EUR 830,000 plus 5% interest p.a. from 16 January 2016 until the date of effective payment and CHF 5,000 of the costs of proceedings before FIFA;

to condemn the Appellant to the payment in the favour of the First Respondent of the legal expenses incurred;

to establish that the costs of the arbitration procedure shall be borne by the Appellant”.

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

- The applicable regulations are the FIFA regulations, more specifically FIFA Statutes and FIFA RSTP. Swiss law shall apply complementarily.

- The First Respondent always acted in compliance with the Transfer Agreement and the applicable regulations.

- The allegation of the Appellant denying the receipt of the facsimile dated 21 March 2016, addressing a payment reminder for the third instalment payment, must be rejected. Indeed, the fax report shows that the facsimile went regularly through.

- The Appellant cannot contend it did not have the bank account details of the First Respondent for the payment of the third instalment as: (i) the First Respondent did provide (twice, on 5 January 2015 and on 23 January 2015) the Appellant with the bank account details and there was no need to repeat such action for further payments; (ii) the latter even acknowledged having processed payments under the Transfer Agreement to the First Respondent; (iii) the Appellant had therefore at its disposal the First Respondent’s contact information and could have, but never did, raised this issue at any time; (iv) had the Appellant acted in good faith, it would have informed the First Respondent accordingly and done everything in its power to comply with its contractual obligations; (v) for the reasons above, the Appellant had no contractual grounds to withhold the payment of any instalment.

- Further, the obligations of the Appellant under the Transfer Agreement, mostly article 6 pertaining to the payment of the instalments, did not depend upon any communication in writing. The communication in writing of the bank account details by the First Respondent is not, contrary to the Appellant’s contention, a condition sine qua non for the payment of the instalments; the only sine qua non condition was the definitive transfer of the Player.

- The payment of the three instalments in question was due and enforceable. Pursuant to Swiss Law, a claim is enforceable when (i) the claim exists and is legally valid and (ii) when it is matured. The existence and the legal validity of the transfer fee is undisputed and the claim is matured as the payment matures on the dates set out in the agreement for the relevant payment.

- Pursuant to article 102.2 of the Swiss CO, the debtor is automatically in default at such date, even without any formal notice of default. Accordingly, the First Respondent was under no obligation to send an invoice to the Appellant for each instalment, even less an “original form” of the invoice.

- The amounts to be paid were already known by the Appellant in the Transfer Agreement and invoices have a mere declaratory significance. Therefore, the existence and legal validity of a claim and its maturity does not depend upon the issuance of such invoice and the assertions of the Appellant’s first witnesses, shall thus be rejected.

- The First Respondent contends that at this stage, the first, the second and the third instalments remain unpaid.

- Additionally, the Appellant transferred the Player to the football club A for an amount of EUR 500,000, unduly enriching itself without complying with its previous financial obligations.

C. The position of the Second Respondent

In its Answer, the Second Respondent submitted the following request for relief:

“That the CAS rejects the appeal at stake and confirms the presently Appealed Decision passed by the Single Judge of the Players’ Status Committee (…) on 13 June 2016 in its entirety.

That the CAS orders the Appellant to bear all the costs of the present procedure.

That the CAS orders the Appellant to cover all legal expenses of FIFA related to the proceedings at hand”.

The arguments of the Second Respondent may, in essence, may be summarised as follows:

- Contrary to the Appellant’s contentions, the Appealed Decision did comply with the procedural obligations set out in article 14, paragraph 4, of the FIFA Procedural Rules as the Single Judge provided clear and predictable reasons for the findings of its conclusions.

- An alleged obligation of the First Respondent to provide “in writing” (whichever its meaning) its bank details to the Appellant cannot constitute, by any means, a valid reason for the latter to withhold the payment of the overdue amount. Thus, the Second Respondent disagrees with the senseless interpretation of the term “writing” used by the Appellant in its Appeal Brief and such interpretation must be dismissed.

- The Appellant submits that pursuant to article 12bis paragraph 2 and 3 of the FIFA RSTP, the Appellant must be found to have delayed due payments. Essentially, the Second Respondent’s contentions are similar to the First Respondent’s.

- The Appellant was perfectly aware of the First Respondent’s bank account details, having processed the EUR 300,000 as part of the payment of the first instalment to the First Respondent. Further, the Appellant did not even try to contact the First Respondent to raise this issue. Therefore, the Appellant failed to provide any pertinent evidence which could demonstrate it needed the bank account details in writing.

- When the First Respondent initiated proceedings before the Single Judge to claim for the payment of the two first instalments, the Appellant never alleged that the First Respondent had failed to send the bank account details in “writing”. On the contrary, the Appellant only alleged a freezing of its assets in Brazil derived from some debts with the Brazilian Tax Authorities. Further, the default notice addressed on 21 March 2016 was effectively sent to the Appellant. No original version of the default notice is required by the FIFA RSTP.

- The witness statements submitted by the Appellant are from its own employees, which means these statements might be affected by diverse contextual factors and therefore, have practically no evidentiary value.

- The Single Judge did not rule extra petita. Indeed, pursuant to article 12bis of the FIFA RSTP, the Single Judge can apply measures aiming at securing the respect of FIFA regulations and therefore can ensure that the clubs comply with their contractual obligations. Thus, the fact that the First Respondent did not request the imposition of any sanction on the Appellant did not hinder the Single Judge to assess such possibility and to ultimately impose these sanctions.

- Article 12bis of the FIFA RSTP gives the deciding bodies of FIFA a wide discretion when it comes to the sanctioning of clubs. Fines imposed by FIFA deciding bodies are not only based on the actual overdue amount but rather on a diverse series of factors and on the wide jurisprudence of the Disciplinary Committee.

- In the present case, the fine was not disproportional, considering the subsequent amount overdue and the fact that it was the fourth time that the Appellant had failed to comply with its contractual obligations. Eventually, the Appellant contended that the fine was disproportional on the basis of only two cases, while the Second Respondent provides numerous cases proving that the current fine is not disproportional.

- It is only right that the Appellant alone must bear the costs of the proceedings as it (i) unnecessarily provoked the use of the resources of FIFA, (ii) wasted the time of the First Respondent, FIFA as well as the CAS and (iii) the First Respondent should not bear the costs of the proceedings as its main request - the payment of the third instalment - was accepted in full by the Single Judge.