FC Lokomotiv v. Slaven Bilic

V. JURISDICTION

41. The jurisdiction of CAS, which is not disputed, derives from Article 58(1) of the FIFA Statutes (2016 edition), providing that “[a]ppeals against final decisions passed by FIFA’s legal bodies and against decisions passed by Confederations, Members or Leagues shall be lodged with CAS within 21 days of notification of the decision in question” and Article R47 of the CAS Code.

42. The jurisdiction of CAS is further confirmed by the Order of Procedure duly signed by all parties.

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

VI. ADMISSIBILITY

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

45. It follows that the appeal is admissible.

VII. APPLICABLE LAW

46. The Club maintains, with reference to Article R58 of the CAS Code and Article 10(10) of the Employment Contract, that the legislation of the Russian Federation shall be exclusively applicable.

47. The Coach does not make any specific submission on the law to be applied, but refers to different provisions of Russian law throughout his submissions.

48. Article R58 of the CAS Code provides the following:

“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 application of which the Panel deems appropriate. In the latter case, the Panel shall give reasons for its decision”.

49. Article 57(2) of the FIFA Statutes stipulates the following:

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

50. The Panel observes that the Termination Agreement and the Annex thereto do not contain a choice-of-law clause, but that Article 10(10) of the Employment Contract determines as follows:

“The Parties hereby definitely agree that in the case of any disputes the Russian laws shall be only applicable”.

51. The Panel finds that due to the fact that the Termination Agreement and the Annex thereto do not include any choice-of-law clause, the parties apparently had no intention to deviate from the choice-of-law made in the Employment Contract.

52. The Panel also notes that both parties have heavily relied upon and substantiated the application of Russian law to the matter at hand throughout their written submissions and that the Coach performed his services in the Russian Federation.

53. The Panel notes that determining the applicable law in football-related matters before CAS is an issue that is frequently debated.

54. The starting point to determine the applicable law is Article 187(1) of Switzerland’s Private International Law Act (“PILA”): “[the] arbitral tribunal shall rule according to the law chosen by the parties or, in the absence of such a choice, according to the law with which the action is most closely connected”.

55. By submitting their dispute to CAS, the parties have implicitly and indirectly chosen for the application of the conflict-of-law rule in Article R58 of the CAS Code, leading to the primary application of the regulations of FIFA. The second alternative referred to in Article 187(1) PILA is therefore not applicable.

56. In the matter at hand, the parties have, besides the above-mentioned implicit and indirect choice of law, however also made an explicit choice of law in Article 10(10) of the Employment Contract for the application of Russian law.

57. In accordance with the Haas-doctrine, Article R58 of the CAS Code “serves to restrict the autonomy of the parties, since even where a choice of law has been made, the ‘applicable regulations’ are primarily applied, irrespective of the will of the parties. (…) Hence any choice of law made by the parties does not prevail over Art. R58 of the CAS Code, but is to be considered only within the framework of Art. R58 of the CAS Code and consequently affects only the subsidiarily applicable law” (HAAS U., Applicable law in football-related disputes – The relationship between the CAS Code, the FIFA Statutes and the agreement of the parties on the application of national law, Bulletin TAS / CAS Bulletin, 2015/2, p. 11-12).

58. A further question arises as to the relation between the parties’ explicit choice of law in the Employment Contract and the reference in Article 57(2) FIFA Statutes to the subsidiary application of Swiss law.

59. According to the Haas-doctrine, “in appeal arbitration proceedings [Article R58 of the CAS Code] assumes that the federation regulations take precedence. Consequently, the rules and regulations of a federation also take precedence over any legal framework chosen by the parties (…). If, therefore, the federation rules provide that Swiss law is to be applied additionally (to the rules and regulations of FIFA) then this must be complied with by the Panel. (…) Where [Article 57(2) FIFA Statutes] “additionally” refers to Swiss law, such a reference only serves the purpose of making the RSTP more specific. In no way is the reference to Swiss law intended to mean that in the event of a conflict between the RSTP and Swiss law, priority must be given to the latter. (…) Consequently the purpose of the reference to Swiss law in [Article 57(2) FIFA Statutes] is to ensure the uniform interpretation of the standards of the industry. Under [Article 57(2) FIFA Statutes], however, issues that are not governed by the RSTP should not be subject to Swiss law” (HAAS U., Applicable law in football-related disputes – The relationship between the CAS Code, the FIFA Statutes and the agreement of the parties on the application of national law, Bulletin TAS / CAS Bulletin, 2015/2, p. 14-15). While the Haas-doctrine is not binding on the Panel, the Panel finds it persuasive in its approach.

60. The Panel however notes that the FIFA RSTP are not applicable to the matter at hand, because these regulations only govern employment relationship between clubs and players, whereas the dispute at hand involves an employment relationship between a club and a coach (cf. CAS 2008/A/1464 & 1467, para. 24 of the abstract published on the CAS website).

61. The Panel notes that no regulation of FIFA governs the material aspects of an employmentrelated dispute between a club and a coach.

62. In view of the fact that the FIFA RSTP are not applicable in the matter at hand and because the parties explicitly chose to “agree that in the case of any disputes the Russian laws shall be only applicable”, the Panel finds that there is no room for the subsidiary application of Swiss law. Accordingly, Russian law takes precedence over the application of Swiss law.

63. Even if the FIFA RSTP would have been applicable to the matter at hand, quod non, the Panel finds that the determination of the applicable exchange rate is not an issue that is governed by the FIFA RSTP or any other regulation of FIFA. Therefore, also from this angle, there is no room to justify the application of Swiss law and, also from this perspective, Russian law prevails over Swiss law.

64. In any event, due to the specific circumstances in the matter at hand, considering the multiple references to Russian law in the Employment Contract, acknowledging that the Coach was employed in the Russian Federation, and taking into account that both parties rely on Russian law in their written submissions, the Panel finds that Russian law has the closest connection to the dispute at hand.

65. Consequently, the Panel determines that Russian law is applicable to the substance of the dispute in the matter at hand.

VIII. PRELIMINARY ISSUE

66. During the hearing, the Panel clarified that it would address the admissibility of the documents submitted by the Club, in a letter dated 1 March 2018, in the arbitral award.

67. With this letter the Club submitted an expert report of Mr Anton Zykov, an expert in tax and accounting, and translations into English of certain provisions of the Russian Labour Code. The letter indicates that the answer to the Coach’s claim in the proceedings before the FIFA PSC and two letters were also attached, but this was not the case.

68. The Club argues that such newly submitted evidence should be admitted to the case file on the basis of Article R44.1 of the CAS Code. The Club maintains that the exceptional circumstances consist of the fact that Mr Evgeny Krechetov, former Legal Director of the Club and witness called by the Coach, has friendly relations with counsel for the Coach for more than 10 years. Mr Krechetov and counsel for the Coach were involved in negotiating the Termination Agreement and the Annex, i.e. the former represented the Club, and the latter the Coach. The Club argues that this gives reason to doubt the independence and impartiality of the witness. In order to secure the equality of the parties, the Club submits that the Panel should examine the full and objective opinion of Mr Zykov.

69. The Coach objected to the admissibility of the newly submitted documents.

70. The Panel first of all notes that the Club mistakenly relies on Article R44.1 of the CAS Code in submitting these documents. Article R44.1 of the CAS Code governs the situation in ordinary arbitration proceedings. Since the present proceeding is an appeal arbitration proceeding, the issue is governed by Article R56 of the CAS Code. The Panel considers this to be a typographic mistake and notes that Article R44.1 and R56 of the CAS Code do not materially differ.

71. The Panel finds that the translations of certain provisions of the Russian Labour Code are to be admitted into evidence as these documents solely contain publicly available information.

72. The content of the letter dated 1 March 2018 is also admitted to the file insofar as the Club questions the credibility of Mr Krechetov as witness. The Panel will take this reasoning into account in assessing the significance of Mr Krechetov’s witness statement.

73. The Panel however finds that no exceptional circumstances have been presented by the Club that justify the filing of Mr Zykov’s expert report one and a half weeks before the hearing. The Panel finds that nothing prevented the Club from filing this expert report with its Appeal Brief. The mere fact that the Coach called Mr Krechetov as a witness in his Answer does not make this any different, because Mr Zykov’s expert report does not relate to any factual circumstances surrounding the conclusion of the Termination Agreement and the Annex thereto and therefore does not relate to Mr Krechetov’s witness statement. In any event, Mr Zykov’s expert report is dated 31 January 2018, while the Club did not provide any reason for the fact that it only forwarded it to the CAS Court Office on 1 March 2018.

74. Consequently, in the absence of any exceptional circumstances being present, the Panel rules that Mr Zykov’s expert report is not admitted to the case file.

IX. MERITS — A. The main issues

75. The main issues to be resolved by the Panel are:

i. Is the exchange rate on the date of conclusion of the Termination Agreement and the Annex applicable or the exchange rates on the actual dates of payment?

ii. Did the FIFA PSC Single Judge correctly calculate the amount to be paid by the Club to the Coach?

i. Is the exchange rate on the date of conclusion of the Termination Agreement and the Annex applicable or the exchange rates on the actual dates of payment?

76. The Panel notes that the main issue in dispute between the parties is on which date(s) the exchange rate between RUB and EUR had to be calculated. The Club argues that the date of conclusion of the Termination Agreement (i.e. 17 June 2013) is decisive, whereas the Coach maintains that the dates of payment of the individual instalments on later dates are decisive.

77. In accordance with Russian law, salaries in the Russian Federation are to be paid in RUB.

78. Article 317(2) of the Civil Code of the Russian Federation (the “CCRF”) provides as follows (in translation):

“In the pecuniary obligation it may be stipulated that it shall be liable to the payment in roubles in the amount, equivalent to the definite amount in the foreign currency, or in the agreed monetary units (ECU, the “special borrowing rights”, etc.). In this case, the amount liable to the payment in roubles shall be defined in conformity with the official exchange rate of the corresponding currency or of the conventional monetary units by the day of the payment, unless the other exchange rate or the other day of its formulation has been established by the law or by the parties’ agreement”.

79. Accordingly, in principle, the exchange rate on the date of payment applies, unless agreed or determined otherwise. The Panel finds that the burden of proof to establish that the parties agreed on a different arrangement lies with the Club.

80. Clause 6 of the Annex to the Termination Agreement provides as follows:

“The compensation shall be paid in Russian rubles at a currency rate of the Central Bank of Russia on the day of charge as follows:

• 1 019 000 Euro including tax – no later than 30 June 2013;

• 1 000 000 Euro including tax – no later than 30 November 2013;

• 1 000 000 Euro including tax – no later than 31 January 2014;

• 1 023 000 Euro including tax – no later than 28 February 2014”.

81. Accordingly, the parties opted to apply the exchange rate on the “day of charge”.

82. The Panel takes note of the fact and considers it important to stress that the parties did not define nor specify the term “day of charge”, or any definition thereof, in the Termination Agreement or in the Annex.

83. Despite the absence of a definition or further specification of the term “day of charge”, the Club submits that the “day of charge” coincides with the “day of dismissal” (i.e. 17 June 2013), whereas the Coach maintains that the “day of charge” coincides with the “days of payment”.

84. Article 431 of the CCRF provides as follows:

“While interpreting the terms of the contract, the court shall take into account the literal meaning of words and expressions, contained in it. The literal meaning of the terms of the contract in case of it being vague shall be identified by way of comparison with other terms and with the meaning of the contract as a whole.

If the rules contained in the first part of the present Article, do not make it possible to identify the content of the contract, the actual common will of the parties shall be found out with account for the purpose of the contract. All the corresponding circumstances, including negotiations and correspondence preceding the

conclusion of the contract, habitual practices in relationships between the parties, customs and subsequent behaviour of the parties shall be taken into account”.

85. The Panel finds that the terminology “day of charge” is not clear in and of itself and requires interpretation in accordance with Article 431 CCRF.

86. Applying the first paragraph of Article 431 CCRF, the Panel finds that in comparison with the other terms of the Annex and looking at the meaning of the Annex as a whole, it cannot be concluded that the parties deviated from the default rule that the exchange rates on the “days of payment” are applicable.

87. Indeed, the Annex indicates that the amounts to be paid by the Club to the Coach are specified in EUR. It appears that RUB were solely mentioned because this is required by Russian law. Should the reasoning of the Club be followed, there would be no reason whatsoever for the parties to refer to any amount in EUR, because at the moment of conclusion of the Annex it was clear to them what the exchange rate between RUB and EUR was. The Panel finds that common sense dictates that the stipulation of the amounts in EUR must be allocated a certain significance.

88. Because of the international nature of the employment relationship at hand, and because the Coach was not domiciled in the Russian Federation, the Panel finds that it is to be presumed that the Coach was only interested in the amount he would be paid in EUR, and not in the amount of RUB such amount in EUR would represent. This is exemplified by the fact that the Annex refers to a guaranteed net amount in EUR. Although this reference is made in respect of individual income tax, it indicates that the Coach wanted to have clarity about the exact net amount he would be paid in EUR, and was not concerned how much the Club would effectively have to pay in RUB in order to bring about such net payment in EUR.

89. The Panel also considers it important that if it had indeed been the intention of the parties to apply the exchange rate of the “day of dismissal”, they could have easily specified the exact exchange rate in the Annex or could have referred explicitly to the date of 17 June 2013, but they did not do so.

90. As to the Club’s argument that the Coach never complained about the fact that his salary was paid on the basis of the exchange rate on the day it fell due and not on the actual dates of payment, the Panel finds that this is not relevant for the matter at hand. Indeed, the actual dates of payment and the due dates do not materially differ. The question is whether the parties intended to determine that the exchange rate on the date of conclusion of the Termination Agreement and the Annex thereto would apply. If this analogy would be extended to the Employment Contract, this would mean that the exchange rate on the date of conclusion of the Employment Contract would apply and not the exchange rate of the monthly due dates. The Panel finds that such approach cannot reasonably be followed.

91. The Club also argues that, pursuant to Article 140 of the Labour Code of the Russian Federation (the “LCRF”), the amounts set out in the Annex fell due on the final day of employment, i.e. 17 June 2013.

92. Article 140 LCRF provides as follows:

“On termination of the labour contract all the sums, which are due to the employee by the employer are paid on the day of the employee’s dismissal. If the employee did not work on the dismissal day, the corresponding sums must be paid not later than on the next day after submitting by the dismissed employee payment claim”.

93. Indeed, the Panel finds that all the Coach’s financial claims against the Club, in principle, fell due on 17 June 2013. However, the parties agreed on a payment schedule in the Annex, pursuant to which different due dates were agreed. The Club’s argument in this respect is therefore to be dismissed. The Panel finds that the Club did not establish on what grounds in the Russian legislation the “day of charge” should not be “the day of payment”. Hence, it was not proven by the Club that it was agreed that the exchange rate did not apply on the date of payment. The mere fact that the amounts due may have been considered paid on 17 June 2013 for tax purposes under Russian legislation is also of no avail to the Club, because the Club itself agreed to a new payment plan with different due dates. In the absence of a clear determination that the exchange rate of 17 June 2013 was applicable, the Panel finds that the consequences of the conclusion of the payment plan as set out in the Annex in respect of tax obligations is not something that concerns the Coach, because the Club agreed to pay him a guaranteed amount in EUR. The payment of tax obligations is irrelevant to the private agreement between the parties; payment of tax obligations is something that happens irrespective of payments under the parties’ contract.

94. In view of the above, the Panel finds that the Club did not succeed in establishing that the parties intended to apply the exchange rate on the “day of dismissal” and therefore concludes that the exchange rates on the days of payment are applicable.

ii. Did the FIFA PSC Single Judge correctly calculate the amount to be paid by the Club to the Coach?

95. The Club also maintains that the FIFA PSC Single Judge did not properly calculate the amount to be paid by the Club to the Coach in the Appealed Decision.

96. In order to verify what amount in EUR the Coach is entitled to receive from the Club, the Panel observes that the FIFA PSC Single Judge determined that the following exchange rates between RUB and EUR were applicable on the following dates, which remained uncontested between the parties in the present arbitration:

- on 28 June 2013, established at RUB 42.83 per EUR 1;

- on 15 July 2013, established at RUB 42.66 per EUR 1;

- on 29 November 2013, established at RUB 44.99 per EUR 1;

- on 30 January 2014, established at RUB 47.22 per EUR 1;

- on 28 February 2014, established at RUB 49.34 per EUR 1.

97. It also remained uncontested that the Coach received the following amounts from the Club on the following dates:

- RUB 37,628,056.80 on 28 June 2013;

- RUB 24,615,049.70 on 15 July 2013;

- RUB 36,926,454 on 29 November 2013;

- RUB 36,926,554 on 30 January 2014;

- RUB 37,775,761.60 on 28 February 2014;

Total: RUB 173,871,876.10.

98. Applying the above-mentioned exchange rates to the amount in RUB received by the Coach, the Panel observes that the Coach was paid the following amounts in EUR on the following dates:

- EUR 878,544.40 on 28 June 2013;

- EUR 577,005.38 on 15 July 2013;

- EUR 820,770.26 on 29 November 2013;

- EUR 782,010.89 on 30 January 2014;

- EUR 765,621.43 on 28 February 2014;

Total: EUR 3,823,952.36.

99. The Panel observes that based on the Annex, the Coach was entitled to the following amounts in EUR:

- EUR 886,530 (EUR 1,019,000 -/- 13% personal income tax) by 30 June 2013;

- EUR 504,549.54 (EUR 579,942 -/- 13% personal income tax) by 15 July 2013;

- EUR 870,000 (EUR 1,000,000 -/- 13% personal income tax) by 30 November 2013;

- EUR 870,000 (EUR 1,000,000 -/- 13% personal income tax) by 31 January 2014;

- EUR 890,010 (EUR 1,023,000 -/- 13% personal income tax) by 28 February 2014;

Total: EUR 4,021,089.54 (EUR 4,621,942 -/- 13% personal income tax).

100. Accordingly, the Coach is still entitled to an amount of EUR 197,137.18 (EUR 4,021,089.54 - /- EUR 3,823,952.36).

101. The Panel therefore finds that the appeal shall be partially upheld as the Appealed Decision had initially granted the Coach’s claim to be awarded the equivalent in RUB of the amount of EUR 256,001.40.

102. The Panel notes that the FIFA PSC Single Judge decided in the Appealed Decision that the Coach was entitled to an amount of RUB 18,489,376, i.e. the equivalent in RUB of EUR 256,001.40. Applying its discretion under the well-known legal principle of jura novit curia, or more appropriately jura novit arbiter for present purposes, pursuant to which the content and the application of the law is a matter for the arbitral tribunal, the Panel does not find it appropriate to award the outstanding amount in RUB, because, regardless of the value thereof in RUB, the Coach was entitled to a guaranteed amount in EUR. The Panel therefore finds that the Coach is entitled to receive an amount of EUR 197,137.18 from the Club, in the equivalent amount in RUB.

103. The Panel notes that the clear intent of the parties, when concluding the Termination Agreement and the Annex, was that the amount to be received by the Coach in EUR was guaranteed, even if the actual payments were to be made in RUB. Therefore, the Club should bear the consequences of changes of exchange rates.

104. However, because the Coach did not file an independent appeal against the Appealed Decision, and in order to prevent a ruling whereby the Coach is awarded more than he was entitled to on the basis of the Appealed Decision, in conformity with the principle of non ultra petita, the Panel finds that the amount to be paid by the Club to the Coach can in any event not exceed an amount of RUB 18,489,376.

105. Finally, since the FIFA PSC Single Judge only awarded interest to the Coach in case the Club would not pay the awarded amount within 30 days of notification of the Appealed Decision, and because the Coach did not lodge an independent appeal against the Appealed Decision, the Panel finds that the Coach is only entitled to interest at a rate of 5% per annum over the outstanding amount as from 30 days after the notification of the present arbitral award until the date of effective payment.

B. Conclusion

106. Based on the foregoing, the Panel holds that:

i. The exchange rates on the actual dates of payment are applicable.

ii. The Club has to pay to the Coach an outstanding amount of EUR 197,137.18 in the equivalent amount in RUB, but only insofar such amount does not exceed RUB 18,489,376, with interest at a rate of 5% per annum accruing as from 30 days following the date of notification of the present arbitral award.

107. Any other and further motions or prayers for relief are dismissed.