Sport Club Internacional v. Hellas Verona Football Club S.p.A.

V. JURISDICTION

34. Article R47 of the CAS Code states:

“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 …”.

35. The jurisdiction of CAS, which is not disputed, derives from Article 58 para. 1 of the FIFA Statutes (the “FIFA Statutes”) as it determines 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”.

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

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

VI. 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 of a previous agreement, the time limit for appeal shall be twenty-one days from the receipt of the decision appealed against. After having consulted the parties, the Division President may refuse to entertain an appeal if it is manifestly late”.

39. The grounds of the Appealed Decision were notified to the parties on 8 December 2017. The Appellant filed its Statement of Appeal serving as Appeal Brief on 22 December 2017 and therefore within the 21-day-period set out in the FIFA Statues. The Appeal filed by the Appellant is accordingly admissible.

40. According to Article R51 of the CAS Code, the Appellant needs to specify the name(s) of any witnesses or experts, it intends to call, in its written submissions. After the submissions, this is only possible if the other party agrees or the Panel orders so on the basis of exceptional circumstances.

41. By letter dated 28 June 2018, the Appellant presented two experts more than half a year after the Appeal Brief was submitted. One might consider its request as a reaction to FIFA’s answer to the question of the parties. In the case at hand however, the Appellant reacted to these answers with a written statement already on 11 June 2018, only to produce another statement a few days later, including said request.

42. The Appellant presented no reason why this request could not have been made at an earlier stage in the proceedings and it must therefore be inadmissible. The Panel furthermore does

not see how the proposed experts could have added substantive and sufficiently independent evidence to this case, which is why exceptional circumstances could not be substantiated. The request by the Appellant was consequently rejected.

VII. APPLICABLE LAW

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

“Law Applicable to the merits

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

44. The Panel notes that Article 57 par. 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”.

45. The Panel considers that the parties agreed that any dispute shall be resolved in accordance with the FIFA Statutes and the Regulations on the Status and Transfer of Players (edition 2016) (the “RSTP”). As the Player was registered with the Appellant on a definitive basis on 20 July 2016, the 2016 edition of the Regulations on the Status and Transfer of Players is applicable to the matter at hand. Consequently, the Panel will decide the present dispute primarily in accordance with the RSTP and, subsidiarily, apply Swiss law in case of any gap in the RSTP.

VIII. MERITS — A. Legal framework

46. Before entering into the merits, it is worth recalling the pertinent legal articles for the case at hand:

a) Art. 10 para. 1 RSTP: Loan of professionals

“A professional may be loaned to another club on the basis of a written agreement between him and the clubs concerned. Any such loan is subject to the same rules as apply to the transfer of players, including the provisions on training compensation and the solidarity mechanism”.

b) Art. 20 RSTP: Training compensation

“Training compensation shall be paid to a player’s training club(s): (1) when a player signs his first contract as a professional, and (2) each time a professional is transferred until the end of the season of his 23rd birthday. The obligation to pay training compensation arises whether the transfer takes place during or at the end of the player’s contract. The provisions concerning training compensation are set out in Annexe 4 of these regulations. (…)”

c) Art. 1 para. 1 of Annexe 4 of the RSTP:

A player’s training and education takes place between the ages of 12 and 23. Training compensation shall be payable, as a general rule, up to the age of 23 for training incurred up to the age of 21, unless it is evident that a player has already terminated his training period before the age of 21. In the latter case, training compensation shall be payable until the end of the season in which the player reaches the age of 23, but the calculation of the amount payable shall be based on the years between the age of 12 and the age when it is established that the player actually completed his training.

d) Art. 2 of Annexe 4 of the RSTP:

“1. Training compensation is due when:

i) a player is registered for the first time as a professional; or

ii) a professional is transferred between clubs of two different associations (whether during or at the end of his contract) before the end of the season of his 23rd birthday.

2. Training compensation is not due if:

i) the former club terminates the player’s contract without just cause (without prejudice to the rights of the previous clubs); or

ii. the player is transferred to a category 4 club; or

iii. a professional reacquires amateur status on being transferred”.

e) Art. 3 para. 1 of Annexe 4 of the RSTP:

“On registering as a professional for the first time, the club with which the player is registered is responsible for paying training compensation within 30 days of registration to every club with which the player has previously been registered (in accordance with the players’ career history as provided in the player passport) and that has contributed to his training starting from the season of his 12th birthday. The amount payable is calculated on a pro rata basis according to the period of training that the player spent with each club. In the case of subsequent transfers of the professional, training compensation will only be owed to his former club for the time he was effectively trained by that club”.

B. The system of training compensation

47. The rules for training compensation are set out in the articles mentioned above. The rationale for FIFA’s training compensation system is to ensure that training clubs are adequately rewarded for the efforts and costs they have invested in training young players.

48. In the case at hand, the Panel has to deal with the effects of loan transfers on training compensation. It is undisputed that a loan period does not interrupt the period for which training compensation is due, a loan transfer “does not breach the chain” (cf. inter alia CAS

49. It was also confirmed by CAS and FIFA that the former club receives training compensation for the time before and the time after the loan (cf. CAS 2014/A/3620). In the present case, Udinese therefore received training compensation for the time before and after the player was on loan at different clubs. This of course counts only for loan transfers – it would be judged differently if the Player was transferred to another club on a permanent basis and then returned again to his former club.

50. The main question in this case relates to the club to which the Player is loaned and is as follows: What happens with the club to which the player was loaned while such player remains contractually bound to the loaning club as well? Is this club to which the Player was loaned entitled to training compensation for the time the Player was under a loan contract with it and if yes, from which club should said club receive the training compensation?

51. In CAS 2015/A/4335, the case turned exactly on these questions. As this case has in fact the identical constellation between the parties as the present matter, the Panel deems it useful to quote an important part of the award:

“57. It is now well established that the loan of a player to another club does not interrupt the continuing training period of the player. Assume for example that, as per the terminology adopted above, Club 1 loans out a player to Club 2. It then sells the player to Club 3. In this case, Club 1 should be compensated only for the time that it provided training to the player itself, and not for the time that the player was being effectively trained by Club 2. For that time, that is time of training with Club 2, it is Club 2 that has the right to be compensated in terms of being paid a training compensation by Club 3. As a consequence, the club, which transferred the player on a loan basis to another club, is entitled to training compensation for the period of time during which it effectively trained the player, however excluding the period of time of the loans to the other club (CAS 2014/A/3710 and reference; CAS 2013/A/3119)” (emphasis added).

52. Applying this to the case at hand, the Respondent would be Club 2 while the Appellant would be Club 3. The CAS 2015/A/4335 award makes a very clear award and contains the same situation as in the present case. It follows from this jurisprudence that the club to which the Player was loaned, i.e. the Respondent, has a right to claim training compensation from the club to which the Player is transferred on a permanent basis, i.e. the Appellant. Furthermore, this approach reflects the actual and long-standing FIFA jurisprudence.

53. An older CAS award held it differently than in the CAS 2015/A/4335 award, estimating that the payment of training compensation should be made in respect to the former club only for the period of the last cycle of registration with that club, i.e. the time at that club after his return from the loan (CAS 2012/A/2908).

54. To put it with even greater clarity, the situation in the case at hand will be explained in further detail: For the sake of training compensation and in accordance with the RSTP, the contract of the Player with Udinese lasted about three years. During this time, the Player was always contractually bound to Udinese. These three years represent the time period for which training compensation is in principle due as this is the “former club” of the Player.

55. If, however, the Player played on loan for other clubs during this time, it does not change the overall amount of training compensation as this period has to be viewed as one entire period, since the Player remained contractually bound to one club, Udinese, during this entire period. The notion of a “former club” must not be interpreted stricto sensu but rather according to the principles set out above. To further strengthen this analysis, it needs to be emphasized that no permanent transfer of the Player to any other third party club occurred during this entire period.

56. A strict literal interpretation of the principle of “former club” would lead to an inequitable position in which both loaning clubs and clubs taking players on loan would not receive training compensation in a manner which would fairly reflect their investment of time and expertise in developing players who are still training. Applying such a literal interpretation could therefore act as a dis-incentive both to clubs loaning out players and to clubs taking players on loan thus potentially inhibiting the development of many young players.

57. Contrary to what the Appellant suggests, a loan transfer almost always contains an educational element, especially with young players, and cannot be considered in the same way as a regular, permanent transfer. The original club also usually carefully picks the club where such a player is placed in order to safeguard the best possible development for the player’s further career. The system of training compensation and loan transfers in fact often rest upon the same underlying goal, the education and training of young players. Ensuring that the training clubs which register players on a loan basis benefit from the training compensation mechanism was also one of the main goals of the legislator while drafting Art. 10 para. 1 RSTP.

58. In the end, this is a question of distribution only. It was pointed out above that the period of training compensation must be considered as one entire period during which the player was under contract with his club of origin. This “former main club” should however not receive compensation for a service it did not provide itself or at most indirectly through enabling the loan transfer. A club, to which a player is transferred on loan and which thus effectively trains that player, is in principle entitled to training compensation corresponding to the period it provided training to the player, unless the loaning club can demonstrate that it bore the costs for the player’s training for the duration of the loan (CAS 2008/A/1705).

59. In this regard, the CAS 2015/A/4335 award further holds very clearly that the new permanent club is the debtor of the training compensation (cf. para. 50 above). Another conclusion would

lead to unreasonable results, forcing the club which takes the player on loan having to claim the training compensation from the club from which it obtained the player on a loan basis.

60. Furthermore, loan transfers are often free of charge. In the end, a different approach would force the loaning club to not only receiving no remuneration but to even have to pay for the loan. The CAS 2015/A/4335 award is in this regard more pertinent, as it reflects the fundamental idea of youth development and training compensation. As a consequence, the majority of the Panel sees no reason to depart from this jurisprudence. The Respondent is therefore entitled to claim training compensation from the Appellant.

61. As the conclusion followed by the Panel is also in accordance with a long-standing jurisprudence of FIFA, the argument of the Appellant, that such an approach could materially change the dynamics of the loan and transfer market, is unsubstantiated. Clubs are aware of how the current transfer system operates in accordance with the applicable regulations, even if the ones regarding training compensation could be drafted in a clearer way, and longstanding jurisprudence and therefore calculate the relevant fees and expenses accordingly when entering into a transfer agreement. If the Appellant omitted to do so in the case at hand, it cannot be imposed on the training club, i.e. the Respondent, to bear the consequences. It is rather the other way round: the approach suggested by the Appellant would be the one to totally change how the transfer market currently operates.

62. Contrary to the Appellant’s view, the jurisprudence of FIFA is in fact consistent and always was since the implementation of the relevant applicable rules. To have a consistent jurisprudence does not necessarily mean that there are a lot of awards – a low number of cases might as well speak for a wide acceptation of a rule.

63. The Panel therefore arrives at the conclusion that the Respondent has a right to training compensation for the period of development/education provided under the applicable FIFA rules, provided that there was no principle of exception applicable, as will be examined below. Such training compensation must be claimed from the club to which the player is transferred on a permanent basis, i.e. the Appellant.

C. Completion of training

64. The Appellant further stresses that the Player in any case had already completed his training period at the time of the transfer to the Respondent. According to Art. 1 para. 1 of the Annexe 4 of the RSTP, training compensation is not due if “it is evident that a player has already terminated his training period before the age of 21”.

65. There are no specific criteria when exactly the training period can be considered terminated. It always has to be assessed on a case-by-case basis. In the award CAS 2008/A/1705, key factors to be looked at were listed (cf. para. 43):

“However, even though regular performance for a club’s “A” team can trigger the end of a player‘s training, this does not necessarily constitute the only and decisive factor for the completion of a player’s training. There are further factors that are generally taken into consideration such as the player’s value at a club, reflected in

the salary a player is paid, in the loan fee that is achieved for his services or in the value of the player’s transfer, the player’s public notoriety at national and international level, his position at the club if established as a regular or even holding the captaincy, his regular inclusion in the national team and so forth”.

66. This approach was confirmed by CAS in further awards (e.g. CAS 2014/A/3553).

67. The burden of proof to establish a completion of training lies with the party that claims it (FIFA circular no. 801; CAS 2014/A/3553 as cited below):

“The burden of proof for any earlier completion of a player’s training period lies with the party that is arguing the earlier completion. The FIFA Dispute Resolution Chamber and the CAS have adopted a strict approach when establishing the early completion of the player’s training before the age of 21”.

68. The demanded case-by-case analysis requires a recapitulation of the player’s career up to that point. In the present matter, the Appellant presents the following arguments as to why the training period should be deemed completed:

- With Roma and Udinese, the Player played for two big clubs in one of the biggest leagues. His market value rose from EUR 500’000 (January 2012) to EUR 3’500’000 (July 2014). The Respondent also had the possibility to buy the Player at a sum of EUR 18’000’000. The Player did not appear in many matches for these two clubs, but this is only due to the fact that he was the direct replacement for the respective club legends Francesco Totti and Antonio Di Natale.

- At international level the Player was also top scorer of the South American U20- Championship and led Uruguay to the final of the U-20 World Cup in 2013 where he was also elected second best player of the entire tournament. The only reason why he was not summoned to the 2014 World Cup in Brazil is that Uruguay has other world class strikers.

69. The Respondent on the other hand presented the following points:

- The Player played 57 minutes in the 2012/2013 season for AS Roma, was then transferred to a lower club in the same league (Udinese) where he only played 771 minutes in the 2013/2014 season. These numbers show that his training was far from being completed.

- He has not played a single match for the national first team up to date, all the mentioned appearances happened for the under-20 team.

70. Bearing this in mind, the Panel notices that FIFA applies a strict approach as to the completion of training, so as not to jeopardise the right of training clubs to receive training compensation. Even if a player played many matches for the first team in a first division, it was still not considered enough in certain cases.

71. In the present case, the Player played only a fraction of the minutes possible for the mentioned teams, i.e. Roma and Udinese. He has never played for the first national team. All further factors do not show at all that the Player was already fully trained.

72. Transfer sums for an optional permanent transfer inserted into loan agreements mostly reflect a potential future value that a player might have at a later stage. They might in some cases also be fixed at a deliberately high level in order to make sure that a player returns to the club of origin, i.e. the loaning club. Anyway, such sums cannot be used to establish the completion of training. Considering all these facts, the Panel finds that it is far from evident, as the RSTP provides, that the training period was complete.

D. Conclusion

73. To summarise, the majority of the Panel concludes that the Respondent is in principle entitled to training compensation and that none of the exceptions is given in the present matter, such as a possible early completion of the training period. It therefore decides to dismiss the Appellant’s appeal in its entirety.